Sunday, 08 December, 2019

S&P 500 set to open at record high on dovish Fed

S&P 500 climbs to new record high The Dow Jones industrial average jumped 249.17 points to 26,753.17 on Thursday. Above the New York Stock Exchange
Ginger Lawrence | 23 June, 2019, 19:41

US stocks turned higher by late morning on Friday, the day after the S&P 500 closed at a record high, as investors focused on rising tensions between the USA and Iran.

The milestone, which eclipsed the benchmark index's last record close on April 30, came amid a swift turnaround for stocks this month that has erased the losses from a steep sell-off in May. It's up 7.2% so far in June.

The rally Thursday came as investors balanced optimism over the possibility that the Federal Reserve could cut interest rates in response to a slowing economy and jitters about the prospects of dimmer corporate profits should a severe slowdown take hold.

Those worries prompted traders to shift money into safe-haven assets this week, such as gold and US government bonds. The yield on the 10-year Treasury note fell to 2%, the lowest since November 2016.

Gold prices rose to near six-year highs.

Investors will now look to a G20 summit in Japan next week for signs of progress on talks between the United States and China to resolve their differences that had sparked the benchmark index's worst monthly performance this year in May.

Oil prices surged, with an extra boost from news that Iran shot down a USA military drone, raising fears of a military confrontation between Tehran and Washington. Crude prices had been in a bear market just weeks ago, what Wall Street calls a drop of 20% or more.

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The S&P 500 posted 48 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 63 new highs and 59 new lows.

The Dow Jones Industrial Average climbed 0.94% to end at 26,753.17 points, while the S&P 500 gained 0.95% to 2,954.18. The Nasdaq gained 64.02 points, or 0.8%, to 8,051.34. S&P 500 e-minis were down 6.5 points, or 0.22%, and Nasdaq 100 e-minis were down 24 points, or 0.31 %. The stock was 1.4% higher.

Tehran had received a message from President Donald Trump, delivered through Oman overnight, warning that a US attack was imminent but adding he was against war and wanted talks, Iranian officials told Reuters on Friday.

Among other stocks, Facebook Inc fell 0.6% after Bank of England Governor Mark Carney said major central banks and regulators will want oversight of the social media company's proposed new currency and payment system Libra. The company also blew past forecasts for sales at established auto lots as more customers purchased used vehicles.

The top USA trade negotiator is scheduled to meet with his Chinese counterpart to discuss a trade dispute between the world's two biggest economies before a summit next week in Japan between Presidents Donald Trump and Xi Jinping of China.

"The market is also banking on good trade news out of the G-20 next week". However, Jake Dollarhide, chief executive officer (CEO) of Longbow Asset Management, warns that escalating US-Iran tensions could make any S&P 500 growth short-lived.

Industrial companies also notched solid gains.