Stocks

Wall Street rises as Trump touts EU trade concessions

Reuters New York | Updated on July 26, 2018 Published on July 26, 2018

The Dow Jones Industrial Average rose 172.16 points, or 0.68 per cent, to 25,414.1, the S&P 500 gained 25.67 points, or 0.91 per cent, to 2,846.07 and the Nasdaq Composite added 91.47 points, or 1.17 per cent, to 7,932.24.   -  REUTERS

Tech stocks boost S&P, Nasdaq; Boeing, GM, AT&T dip after results

 Wall Street rose on Wednesday as US President Donald Trump secured concessions from the European Union on trade, while a disappointing quarterly report from Facebook after the bell slammed its stock and threatened to put the brakes on a tech rally.

The benchmark S&P 500 jumped more than half a per cent in the last half-hour of trading on news of the concessions and closed at its highest level since January 29.

Trump said that the United States and the European Union had agreed to work toward eliminating tariffs on industrial goods and increasing US exports of liquefied natural gas and soyabeans to Europe.

The S&P 500 and the Nasdaq had already been boosted earlier in the trading session by gains in the technology sector, and the Nasdaq closed at a record high.

In after-hours trading, however, Facebook shares sank as much as 23 per cent after it warned about slowing growth and climbing expenses.

Facebook’s massive drop also hurt the shares of Amazon, Alphabet and other high-growth companies, and Nasdaq futures fell as much as 0.85 per cent, suggesting the market could open lower on Thursday.

The sanguine news regarding trade helped the Dow reverse earlier losses in Wednesday's session. It had been weighed by Boeing's report of higher costs for its aerial refuelling tanker program. Boeing shares closed down 0.7 per cent.

“Once you got a hint of good news about avoiding a trade war, the market was primed to go higher based on the fact that earnings has been quite strong and economic data has been strong,” said Michael Antonelli, managing director of institutional sales trading at Robert W. Baird in Milwaukee.

Indeed, investors noted that strong corporate earnings have helped prop up US stocks despite ongoing concerns about tariffs raising companies' costs and cutting into their profits.

Of the 148 S&P 500 companies that have reported earnings so far, 85.8 per cent have topped analyst expectations. If the beat rate holds, it will be the highest on record, dating back to the first quarter of 1994, according to Thomson Reuters I/B/E/S.

“We've all been looking for the beginning of the bear market, but so far the commentary from companies has been pretty strong,” said Kim Forrest, senior portfolio manager at Fort Pitt Capital Group in Pittsburgh.

The Dow Jones Industrial Average rose 172.16 points, or 0.68 per cent, to 25,414.1, the S&P 500 gained 25.67 points, or 0.91 per cent, to 2,846.07 and the Nasdaq Composite added 91.47 points, or 1.17 per cent, to 7,932.24.

Coca-Cola Co shares rose 1.8 per cent after the beverage company's quarterly sales and profit beat estimates. Shares of HCA Healthcare Inc jumped 9.2 per cent after the hospital operator raised its full-year earnings forecast.

However, General Motors Co shares fell 4.6 per cent after the automaker cut its 2018 profit forecast, citing rising steel and aluminium costs due to tariffs. After the bell, Ford Motor Co also lowered its profit forecast, and its shares dropped more than 4 percent in after-hours trading. Shares of AT&T Inc fell 4.5 per cent, weighing the most on the S&P, after the wireless carrier's quarterly revenue missed estimates.

Advancing issues outnumbered declining ones on the NYSE by a 1.84-to-1 ratio; on Nasdaq, a 1.31-to-1 ratio favoured advancers. The S&P 500 posted 43 new 52-week highs and seven new lows; the Nasdaq Composite recorded 73 new highs and 83 new lows.

Volume on US exchanges was 6.61 billion shares, compared with the 6.09 billion average for the full session over the last 20 trading days.

Published on July 26, 2018
This article is closed for comments.
Please Email the Editor