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US: Wall Street up on cautious Fed, upbeat data

Thursday, July 7, 2016 - 05:59
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[BENGALURU] US stocks rose on Wednesday as the Federal Reserve was seen refraining from raising US interest rates soon, even as economic data showed the world's largest economy regained speed in the second quarter.

The minutes for the June 14-15 meeting of the US central bank, which took place before Britons voted to leave the European Union, showed widespread unease over the "Brexit" vote, as well as a severe slowdown in hiring by US employers.

Fed policymakers also said rate hikes should stay on hold until they have a handle on the consequences of Brexit. Since the vote, stocks have been volatile on Wall Street, while investors have driven up safe-haven assets such as gold and yields on long-term US debt have fallen to record lows.

"The money that you're seeing deployed in the US in my view is a repercussion of people looking to buy the oasis of growth and safe havens in the world, and that is the US," said Nate Thooft, US-based co-head of global asset allocation at Manulife Asset Management in Boston.

Adding to the view of persisting lower rates, Fed governor Daniel Tarullo said on Wednesday no rate hikes are needed until inflation is more solid.

The Dow Jones industrial average rose 78 points, or 0.44 per cent, to 17,918.62, the S&P 500 gained 11.18 points, or 0.54 per cent, to 2,099.73 and the Nasdaq Composite added 36.26 points, or 0.75 per cent, to 4,859.16.

Most of the major S&P 500 indexes were higher, led by a 1.2 per cent rise in healthcare. Merck's 2.0 per cent rise and Celgene's 4.3 per cent rise were its biggest boosts.

Facebook rose 2.4 per cent to US$116.70 and provided the biggest boost to the Nasdaq and the S&P 500.

The S&P energy index gained 0.6 per cent as oil prices rose more than 2 per cent on the back of robust US economic data.

About half of the 22 US companies expected to top 2016 consensus earnings per share estimates by at least 10 per cent are energy names, according to Goldman Sachs research.

Among the day's decliners, DuPont Co dropped 1.8 per cent to US$61.85 after a US jury ordered the company to pay US$5.1 million to a man who said he developed testicular cancer from exposure to a toxic chemical used to make Teflon. Dupont's spinoff Chemours Co will pay damages, and the stock slumped 22.5 per cent to US$5.93.

Walgreens Boots Alliance fell 2.4 per cent to US$81.55 following results and comments from its CEO that it is bracing for a long period of volatility following the Brexit vote.

US services industry activity hit a seven-month high in June as new orders surged and companies hired more workers, suggesting the economy regained speed in the second quarter.

Advancing issues outnumbered declining ones on the NYSE by a 1.8-to-1 ratio and on the Nasdaq a 1.64-to-1 ratio favored advancers.

The S&P 500 posted 55 new 52-week highs and three new lows; the Nasdaq recorded 61 new highs and 52 new lows.

About 7.4 billion shares changed hands in US exchanges, compared with the 7.72 billion daily average over the past 20 sessions.

REUTERS