Wall Street ends week higher as tech rally continues
by Reuters · Star-AdvertiserREUTERS / 2017
The Wall Street bull is seen in the financial district in New York in this file photo.
U.S. stocks closed higher today after a rocky start to the week, as a rebound in technology shares offset tumbling consumer stocks such as Nike.
Megacaps extended gains from Thursday, when chipmaker Micron Technology’s strong forecasts re-ignited optimism around AI-related shares, which had recently come under pressure over lofty valuations and funding concerns.
Micron reached a record closing high today, ending the day up 7%. Nvidia rose 3.9% as the U.S. launched a review that could allow the first shipments to China of Nvidia’s second-most powerful AI chip.
Meanwhile, Oracle jumped 6.6% after TikTok’s Chinese owner, ByteDance, signed binding agreements to hand control of the short-form video app’s U.S. operations to a group of investors, including the cloud computing giant.
“Tech in general, particularly the AI-related companies, came under a fair amount of pressure and when Micron reported [on Wednesday] and the market reacted the way that it did, there’s the idea that maybe people can come back to these,” said Thomas Martin, senior portfolio manager at Globalt Investments.
December has also traditionally been a strong period for stock markets. Since 1950, the so-called Santa Claus rally has been reflected by the S&P 500 rising by an average of 1.3% over the last five trading days of the year and the first two trading days in January, according to the Stock Trader’s Almanac.
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The Dow Jones Industrial Average rose 183.04 points, or 0.38%, to 48,134.89, the S&P 500 gained 59.74 points, or 0.88%, to 6,834.50 and the Nasdaq Composite gained 301.26 points, or 1.31%, to 23,307.62.
For the week, the S&P gained 0.11% and the Nasdaq rose 0.48%. Meanwhile, the Dow fell 0.67%.
Seven of the S&P 500 sectors closed higher today, while utilities and consumer staples stocks lost 1.34% and 0.49%, respectively.
In consumer names, Nike shares slumped 10.5% after the sportswear giant reported a drop in gross margins for the second consecutive quarter, hurt by poor sales in China and efforts to reset its product mix.
Lamb Weston plunged nearly 26% after the supplier of frozen French fries signaled muted demand for its products for the rest of the fiscal year. Conagra fell 2.5% after the Slim Jim meat snacks maker reported weak earnings. Investors drew comfort from U.S. consumer prices rising less than expected in November, but some analysts flagged that the print could be distorted due to the 43-day government shutdown that prevented the collection of October data.
Traders continued to bet on at least two 25-basis-point interest rate cuts next year from the Federal Reserve, according to LSEG data, while assigning a 20% chance to the first reduction as early as January.
Analysts warned of higher volatility today due to “triple witching,” which is the quarterly, simultaneous expiration of stock options, stock index futures and stock index options contracts.
“The oversold bounce is helping and the options expiration is helping to kind of clear out some of those positions,” said Brent Kochuba, founder of analytics service SpotGamma. However, he noted that the options expiration could leave the market more vulnerable to price swings after the Christmas holiday.
Advancing issues outnumbered decliners by a 1.44-to-1 ratio on the NYSE. There were 269 new highs and 72 new lows on the NYSE. On the Nasdaq, 2,781 stocks rose and 1,890 fell as advancing issues outnumbered decliners by a 1.47-to-1 ratio.
The S&P 500 posted 16 new 52-week highs and five new lows while the Nasdaq Composite recorded 85 new highs and 158 new lows.
Volume on U.S. exchanges was 24.60 billion shares, compared with the 17.19 billion average for the full session over the last 20 trading days.
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