U.S. markets posted a solid performance on Thursday, adding to a week of gains.
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Yum Brands Inc.(YUM) late Wednesday raised its forecast for core operating profit growth, sending shares of Taco Bell’s parent company up 3.4%. Industrial companies extended their longest stretch of gains since 2014.
The S&P 500 added 0.5 percent in NY, extending a record for a fourth day and on track for the longest stretch of gains since March. The gains today pushed the benchmark to 20 times reported earnings, the first the valuation has crossed that threshold since 2009.
The S&P 500 rose 12 points, or 0.6%, to 2,164, with financials and materials sectors leading the gains. Week to date, it has gained about 0.6% but was down almost 6% for the month so far.
Analysts pointed out that US stocks are benefiting from increased demand from investors searching for yield in an environment where about a third of government bonds are at zero or negative rates. “The path of least resistance at this point is to the upside”.
Global equities climbed Thursday as speculation grew that Japan’s Prime Minister Shinzo Abe is contemplating so-called helicopter money, which involves the central bank directly funding government spending. The dollar-denominated commodity also got an added boost after the Bank of England’s surprise decision to leave its key interest rate at a record low lifted the British pound putting some pressure on the USA dollar.
USA share prices have added nearly $2 trillion since June 27, an amount that ranks among the biggest increases in equity value, as easing concern about economic growth and optimism over earnings combines with speculation the Federal Reserve will hold off raising rates.
The S&P 500 closed up 11.32 points to close at 2,163.75.
The bank’s massive trading division also performed strongly in the second quarter, helped by the turbulence in financial markets triggered by the Brexit vote.
Additionally, financial giants Citigroup (C), Wells Fargo (WFC), and US Bancorp (USB) are among the companies due to report their quarterly results before the start of trading.
“The U.S. stocks as the most desirable asset right now, especially if you think of potential earnings growth”, Cavanaugh said. A Citigroup gauge that tracks the degree to which data are exceeding economist projections has jumped to the highest level since January 2015.
A separate Labor Department report showed that producer prices rose by more than expected in the month of June, with energy prices showing another substantial increase.
Meanwhile, odds of a 2016 Fed rate increase have risen after better-than-estimated June payrolls and as equities reached all-time highs.
The U.K. central bank left key rates unchanged at 0.5%, but said most members see looser policy coming at the August meeting.
National turnover was 1.65 billion securities traded, worth $1.98 billion. “The consensus now is no Fed hike and that keeps the dollar from going higher, which in turn helps equities. Earnings so far have been good and now the market is looking at JP Morgan which could trigger a better outlook for the banking sector”. Given that plunging 850 points in the immediate aftermath of last month’s Brexit choice, the Dow has actually rallied roughly 1,200 points or more than 7% over the last two weeks.
USA stocks extended their run on Thursday, 14 July 2016 as the Dow industrials and the S&P 500 notched new closing highs.
Today’s trading volume was below the recent average as fewer than 815 million shares changed hands on the NYSE floor. The U.K.’s benchmark FTSE 100 Index trimmed gains after the BOE’s decision to be up 0.3 percent. MetLife Inc. rallied 4.7 percent, the most in three months, while Prudential Financial Inc. rose 2.6 percent.
Can the ASX make it seven straight days of gains?
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The rand climbed 1.8 percent against the dollar and the ruble gained 1 percent. People familiar with the matter earlier said Monsanto revived talks with BASF SE about a possible combination of their agrochemicals businesses. Bank of America Corp (BAC) rose 2%, while Goldman Sachs Group Inc rallied 2.5%. Newcrest Mining is losing more than 1 percent and Evolution Mining is down more than 2 percent.
