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US: Stocks extend rally after Brexit rout

Thursday, June 30, 2016 - 06:42
38895303 - 29_06_2016 - US-MARKETS-RISE-AFTER-DAYS-OF-VOLATILITY-AFTER-BREXIT-VOTE.jpg

[NEW YORK] US stocks scored solid gains for a second straight day on Wednesday as fears abated about Britain's vote to exit the European Union and its impact on the global economy.

The Wall Street action mirrored European market rallies following a bruising two-day rout after Britain voted Thursday to leave the European Union.

The Dow Jones Industrial Average advanced 1.6 per cent to 17,694.68.

The broad-based S&P 500 rose 1.7 per cent to 2,070.771, while the tech-rich Nasdaq Composite Index climbed 1.9 per cent to 4,779.25.

"In the near term, the scare factor that we had of the unknown and the Brexit, and the cataclysmic response, has been modulated to a point where we're more in a wait-and-see mode," said Art Hogan, chief market strategist at Wunderlich Securities.

Briefing.com analyst Patrick O'Hare cautioned that the gains were "textbook buy-the-dip activity following a big sell-off." "It may be nice to see, but just be aware that the lack of a fundamental driver leaves the rally effort on tenuous ground."

EU leaders were meeting in Brussels without Britain in the first step in a divorce process that is expected to be complicated and protracted.

Nike leapt 3.8 per cent after reporting that fiscal fourth-quarter profits dipped 2.2 percent to US$846 million. The sporting goods maker's sales of US$8.24 billion slightly underperformed analyst expectations.

Investment bank Jefferies said in spite of disappointing results, Nike was well-positioned given its "superior brand positioning and encouraging reads on new product and the pipeline ahead."

Dow member General Electric added 2.0 per cent after US regulators removed its GE Capital from the "too big to fail" designation as a potential risk to the financial system following major asset sales.

Monsanto surged 2.4 per cent as it reported lower profits and sales and said it was "actively" exploring strategic options.

Monsanto chief executive Hugh Grant said he had personally talked with German company Bayer over its US$62 billion takeover proposal, but that there was no "formal update" on the bid and that he held talks with other unspecified companies on strategic options.

Banking shares were sharply higher ahead of the Federal Reserve's release after markets closed of the final results of stress tests that could clear the way for dividend increases. Bank of America jumped 3.9 per cent, JPMorgan Chase 2.8 per cent and Citigroup 4.2 per cent.

AFP