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Good gains at Wall Street

Capital Market |  Jun 29, 2017 10:43 AM IST

Strong rally by financial and technology stocks lift indices

A rally by financial and technology stocks on Wednesday, 28 June 2017 helped lift U.S. equity indices with the S&P 500 posting its largest one-day gain in two months while Nasdaq Composite recorded its best day in eight months.

The Dow Jones Industrial Average gained 143.95 points, or 0.7%, to 21,454.61. The Nasdaq Composite Index rose 87.79 points, or 1.4%, to 6,234. The S&P 500 climbed 21.31 points, or 0.9%, to end at 2,440.69. Financials led the gainers, rallying 1.6%, closely tracking rising long-term Treasury yields. Shares of Caterpillar and J.P. Morgan Chase & Co. led the charge, up more than 2%.

All three main indexes erased Tuesday's losses, which came after a delay to a vote on health-care bill, prompting worries about the prospects for President Donald Trump's pro-growth agenda.

Tech stocks were lagging in pre-market action, but then showed signs of life after the European Central Bank said that the market misjudged yesterday's remarks from ECB President Mario Draghi, which were originally deemed as hawkish. Technology stocks, which suffered a pullback in recent sessions, rebounded from lows, with the sector closing 1.4% higher. Despite recent selloffs in technology stocks, the sector remains fairly robust, while some analysts aren't concerned about recent weakness.

The yield on 10-year Treasurys was up at 2.22%, having risen to a one-month high in the previous session. Higher long-term borrowing costs mean banks can earn bigger spreads on their loans.

The ICE U.S. dollar, a measure of the U.S. unit against a basket of six major rivals, was off 0.4% at 96.02 as gold prices settled, leaving it down more than 1% for the week. A weaker currency is seen boosting commodities priced in dollars, as it makes them cheaper to users of other currencies.

The boost from a weaker currency was partly offset by gains in the U.S. stock market on Wednesday, which benefited from a rally in financial shares, as well as by rising Treasury yields.

Economic data at Wall Street included May Pending Home Sales, the Advance Report for International Trade in Goods for May, and the weekly MBA Mortgage Applications Index. Pending Home Sales for May declined 0.8% (consensus +0.5%). Today's reading follows a revised 1.7% decrease in April (from -1.3%). The Advance Report for International Trade in Goods for May showed a deficit of $65.9 billion, down from a revised deficit of $67.1 billion for April (from -$67.6 billion). The weekly MBA Mortgage Applications Index declined 6.2% to follow last week's 0.6% increase.

Crude Oil prices settled higher on Wednesday, 28 June 2017 lifting their tally of consecutive gains to five, as U.S. government data revealed a sizable weekly decline in domestic crude production, although an unexpected rise in supplies kept gains in check.

August West Texas Intermediate crude added 50 cents, or 1.1%, to settle at $44.74 a barrel on the New York Mercantile Exchange, scoring for a fifth-straight session climb. Brent oil for August delivery rose 66 cents, or 1.4%, to $47.31 a barrel on the ICE Futures Europe exchange.

Data from the U.S. Energy Information Administration showed that total domestic crude production fell by 100,000 barrels a day to 9.25 million barrels a day for the week ended 23 June 2017. The EIA reported that domestic crude supplies edged up by 100,000 barrels last week. That defied forecasts for a decline of 3.25 million barrels forecast but came in below the increase of 851,000 barrels reported by the American Petroleum Institute. Report also showed that gasoline stockpiles fell by 900,000 barrels, while distillate stockpiles also decreased by 200,000 barrels last week. Market had forecast a decline of 900,000 barrels for gasoline and a climb of 500,000 barrels for distillates, which include heating oil.

Among stocks under focus, General Mills rose 1.6% after the food company posted fiscal fourth-quarter earnings and sales topped Wall Street's estimates. Monsanto shares gained 1.3% after the agricultural products company reported fiscal third-quarter profit and sales that beat expectations.

Bullion prices ended higher at Comex on Wednesday, 28 June 2017. Prices ended higher on Wednesday as the dollar extended its decline, but strength in U.S. equities and Treasury yields served to cap the metal's upside.

Gold for August delivery on Comex rose $2.20, or 0.2%, to settle at $1,249.10 an ounce, while September silver advanced 14 cents, or 0.8%, to $16.791 an ounce.

U.S. Treasuries settled mixed. The 10-yr yield climbed one basis point to 2.22% while the 2-yr yield slipped two basis points to 1.36%.

On Thursday, investors will receive Initial Claims (consensus 241,000) and the third estimate of first quarter GDP (consensus 1.2%). Both reports will be released at 8:30 ET.

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