US stocks end at records, lead global equities higher

Nasdaq and S&P 500 hit record highs, powered by technology stocks and a jump in Vertex Pharmaceuticals, while gains on the Dow were capped by a sharp drop in IBM shares.
Traders work on the floor at the closing bell of the Dow Jones Industrial Average at the New York Stock Exchange.
Traders work on the floor at the closing bell of the Dow Jones Industrial Average at the New York Stock Exchange.PHOTO: AFP

NEW YORK (AFP) - All three major US equity indices rose to fresh records on Wednesday (July 19) on solid earnings and higher oil prices, concluding a sunny session for global equities.

The Dow, S&P 500 and Nasdaq all ended at new peaks as investors shrugged off worries about Washington, where President Donald Trump's agenda has languished amid opposition to his health care reform proposal.

Bourses in Europe were higher ahead of Thursday's European Central Bank meeting. Tokyo, Hong Kong and Shanghai also all rose.

Earnings growth among companies in the S&P 500 has thus far been "much better" than expected, said Art Hogan, chief market strategist at Wunderlich Securities.

"That is helping the stock market and is the focus this week," Hogan said.

Other elements that helped boost stocks included better-than-expected housing data and a bullish US oil inventory report that supported oil prices and boosted shares of petroleum-linked companies.

Maris Ogg, president of Tower Bridge Advisors, said sentiment has also been boosted by the improved outlook in Europe following the election of French President Emmanuel Macron as well as the recognition that Trump is a business-friendly President, even if his agenda looks uncertain.

"The market is recognising we are in a pretty good environment and we are at the beginning of a cycle that could go on for quite a while," Ogg said.

Among US companies reporting results, Morgan Stanley surged 3.3 per cent, but IBM and United Continental fell 4.2 per cent and 5.3 per cent after investors found fault with results.

EURO PULLS BACK

The euro surged on Tuesday (July 18) to a near 15-month pinnacle at US$1.1583, but pulled back to US$1.1513 on the eve of the ECB.

ECB chief Mario Draghi has expressed greater confidence in the economy in recent weeks and analysts are looking for him on Thursday to continue to prepare the ground for an eventual shift away from easy-money policy later this year through a tapering of the bond purchases.

Still, Kathy Lien, managing director of BK Asset Management, said ECB officials have been unnerved by the rise of the euro of late and warned the central bank will want to avoid giving the currency a further boost.

"It is in their best interest to halt the one-way move, ease the euro off its highs by repeating that inflation is not on a self-sustainable path, and then gradually set expectations for taper from a lower base," she said.

"That way... they could take the steam out of the rally." .