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Published: Thu, July 14, 2016
Economy | By Melissa Porter

Dow Jones closes at record high


Stocks in the US closed the Tuesday session on a positive note with at least two major equity indices hitting records. "If that is the case, stocks should continue on at least another 5 per cent gain from here this year", said Paul Zemsky, chief investment officer, Multi-Asset Strategies and Solutions at Voya Investment Management in NY. The S&P 500 closed up 0.29 point, or 0.01 percent, at 2,152.43. The blue chips now stand at 18,347.67, about 35 points above the previous record set May 19, 2015.

On Wall Street, the S&P 500 index.SPX on Monday broke the record high it held for more than a year, extending its gain after Friday's bumper job figures reduced worries about slowdown in employment. The stock closed up 5.4 per cent at $10.69, the highest in over two months. The index, which is heavily weighted with technology and biotech stocks, erased its losses for the year Tuesday.

Among the top 10 tech companies so far in 2016, Gilead Sciences is the big loser, falling 14.4 percent.

ENERGY BOOST: Oil drillers and other energy companies are rising on a jump in oil prices. Boeing rose $1.95, or 1.5 percent, to $132.04, and Citigroup added 31 cents, or 0.7 percent, to $42.29.

Despite recent increases, however, bond yields remain near historic lows, a worrisome sign to many analysts. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 4.7 basis points at 1.466 percent.

BONDS AND CURRENCIES: U.S. government bonds fell, pushing yields higher.

"I wish we can be celebrating, but it's a little disconcerting", said Rob Bartenstein, chief executive officer of Kestra Private Wealth Services. Cote notes that If in fact earnings are down as expected, it would be the first time since 2009 we have seen five consecutive quarters of year-over-year earnings declines.

"The better non-farm payrolls, the better earnings glimpse that we got today with Alcoa, that says stocks are worth more, and at lower interest rates, investors are willing to pay a higher multiple".

US government bond prices fell. Earnings per share at companies in the S&P 500 are expected to fall 5.5 percent compared with the same period a year ago, according to research firm S&P Global Market Intelligence.

The S&P 500 and the Dow climbed to record intraday highs as the Nasdaq wiped out its losses for the year, buoyed by increasing prospects of global economic health and the United States earnings season kicking off to a promising start.

DRUG SALES: Teva Pharmaceutical Industries jumped $12.50, or 6 percent, to $212.40 after it gave strong projections for second quarter results and moved closer to completing a $40.5 billion purchase of Allergan's generic drug business.

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So Monday's 7.26-point gain to 2137.17 made it official. Many cautioned that investors should back away from risk exposure this year, considering how long this economic recovery has extended and how poorly stocks performed at the start of 2016. We reserve the right to edit a comment that is quoted or excerpted in an article. They are either approved or deleted.

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