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Tech-Charged Rally Pushes Nasdaq to New Record
12-Jul-18 16:30 ET
Dow +224.44 at 24924.89, Nasdaq +107.30 at 7823.93, S&P +24.27 at 2798.03

https://www.briefing.com/investor/markets/stock-market-update/2018/7/12/techcharged-rally-pushes-nasdaq-to-new-record.htm

[BRIEFING.COM] Wall Street rebounded on Thursday, resuming its recent upward trend following a trade-induced sell off in the prior session. Stocks opened in the green and extended their gains throughout the day.

The major averages each achieved a notable milestone: the Nasdaq (+1.4%) finished at a new record, the S&P 500 (+0.9%) hit its best level since the big drop in early February, and the Dow (+0.9%) returned to positive territory for the year. Small caps underperformed, but the Russell 2000 (+0.4%) still managed a modest gain.

The top-weighted technology sector (+1.8%) led Thursday's broad-based advance. Within the space, influential names like Microsoft (MSFT 104.19, +2.21), Alphabet (GOOG 1183.48, +29.58), and Facebook (FB 206.92, +4.38) rallied to new record highs, adding more than 2.0% apiece. Apple (AAPL 191.03, +3.15) also had a good performance, adding 1.7%.

Chipmakers finished higher overall, but Broadcom (AVGO 209.98, -33.46) tumbled 13.7% after agreeing to acquire software company CA Tech (CA 44.15, +6.94) for approximately $18.9 billion in cash.

Industrials (+1.1%) and health care (+1.1%) were the next-best performing groups, with industrials benefiting from an above-consensus earnings report from Delta Air Lines (DAL 50.73, +0.89), which advanced 1.8%. The consumer discretionary space (+0.7%) finished in line with the broader market as Amazon (AMZN 1796.62, +41.62) rallied 2.4% to a new all-time high.

On the downside, the heavily-weighted financial sector (+0.2%) lagged, closing near the bottom of the sector standings amid another curve-flattening trade in the bond market. Treasuries ended modestly lower, pushing the benchmark 10-yr yield up one basis point to 2.85% and the 2-yr yield up two basis points to 2.60%. That left the 2-10 spread at 25 basis points, which is its lowest level since 2007. Meanwhile, the consumer staples group (-0.1%) was the lone decliner.

In central banking, Fed Chair Jerome Powell said in an interview with Marketplace.org that the economy is "in a good place," but noted that an escalation in tariffs between the U.S. and its trading partners could have a negative impact. Mr. Powell's comments didn't prompt any notable movement in the markets.

Overseas, President Trump wrapped up a two-day NATO summit in Brussels on Thursday morning, saying NATO withdrawal is now "unnecessary" after member states reaffirmed a commitment to spending 2% of their GDP on defense. The president then jetted to the UK for a meeting with Prime Minister Theresa May.

Reviewing Thursday's economic data, which included June CPI, weekly Initial Claims, and the June Treasury Budget:

Total CPI increased 0.1% (Briefing.com consensus +0.2%) in June, and core CPI, which excludes food and energy, rose 0.2% (Briefing.com consensus +0.2%). On a year-over-year basis, total CPI is up 2.9% (vs +2.8% in May) and core CPI is up 2.3% (vs +2.2% in May).
The key takeaway from the report is that consumer inflation is picking up and giving the Federal Reserve the data-based cover it is seeking to continue raising the fed funds rate.
The latest weekly initial jobless claims count totaled 214,000, while the Briefing.com consensus expected a reading of 225,000. Today's tally was below the revised prior week count of 232,000 (from 231,000). As for continuing claims, they decreased to 1.739 million from a revised count of 1.742 million (from 1.739 million).
The key takeaway from the report is that the low level of initial claims reflects a hesitancy on the part of employers to cut workers in an environment where end demand is solid and where it is becoming increasingly difficult to find qualified workers to fill higher-skilled positions.
The Treasury Budget for June showed a deficit of $74.8 billion versus a deficit of $90.2 billion for June 2017.
The Treasury Budget data is not seasonally adjusted, so the June surplus cannot be compared to the $146.8 billion deficit registered in May.

Looking ahead, big banks JPMorgan (JPM), Citigroup (C), and Wells Fargo (WFC) will unofficially kick off the second quarter earnings season on Friday morning, and investors will receive June Import/Export Prices and the preliminary reading of the University of Michigan Consumer Sentiment Index for July.

Nasdaq Composite +13.3% YTD
Russell 2000 +10.1% YTD
S&P 500 +4.7% YTD
Dow Jones Industrial Average +0.8% YTD