U.S. Stocks Up as Technology Shares Keep Rallying
May 23 2017 - 10:11AM
Dow Jones News
By Christopher Whittall
U.S. stocks edged higher Tuesday as investors largely looked
beyond news of a deadly explosion in the U.K.
The blast at a concert hall in Manchester late Monday, which
British police were treating as a terrorist attack, left 22 people
dead. Such attacks in the Western world have had a limited impact
on financial markets in recent times.
The British pound was 0.2% lower against the U.S. dollar
recently, while some initial buying of havens such as government
bonds eased in morning trading.
"It's a tragedy," said Mike Bell, global market strategist at
J.P. Morgan Asset Management, but it doesn't have "a read-through
for markets."
The Dow Jones Industrial Average gained 27 points, or 0.1%, to
20922 shortly after the opening bell. The S&P 500 added 0.1%,
and the Nasdaq Composite rose 0.2%. The indexes ended higher for a
third straight trading day on Monday on gains in technology and
industrial stocks.
The Stoxx Europe 600 was up 0.3%, led by gains in technology
shares, following a mixed session in Asia.
U.S. stocks have bounced back from a sharp decline midway
through last week over concerns that political turmoil in
Washington could derail President Donald Trump's agenda. Some
analysts said a strong corporate earnings season and a robust
underlying economy have lent support to equity markets in recent
sessions.
"The reflation trade is evolving, but not ending. Yes, we have
some political noise, but the company fundamentals remain pretty
supportive," said Jean Medecin, a member of the investment
committee at Carmignac.
"In this environment we believe we are in a 'buy the dip'
market," he said.
In Europe, gains in technology shares helped offset declines in
real estate shares, following strong gains for U.S. technology
stocks on Monday.
Investors need to look beyond the large U.S. technology
companies if they want to manage their risk while still generating
returns, said Mr. Medecin, highlighting opportunities in smaller
companies and those outside the U.S.
Further signs that the European economic recovery is gathering
momentum also helped support local markets on Tuesday. Survey data
showed that eurozone economic growth continued to run at its
fastest rate in six years in May, according to estimates from IHS
Markit.
Asian markets were mostly lower. The largest declines came in
China, where investors have been concerned about the pace of
initial public offerings -- about 10 a week. The Shanghai Composite
Index was down 0.5%, while the Shenzhen Composite Index fell
2.1%.
Japan's Nikkei Stock Average fell 0.3% and Australia's
S&P/ASX 200 declined 0.2%. Korea's Kospi index bucked the trend
to rise 0.3%.
In commodity markets, oil prices slipped slightly after hitting
their highest level in a month in the previous session. Brent, the
global benchmark, was trading down 0.1% at $53.82 a barrel after
paring earlier losses. Market participants are looking ahead to the
meeting this week of the Organization of the Petroleum Exporting
Countries, where the group is expected to extend and even deepen
its production cuts.
In debt markets, Greek government bond yields moved higher on
Tuesday after the country failed to reach a debt-relief deal with
its creditors. Yields rise as prices fall.
The yield on the 10-year Treasury note declined to 2.246% from
2.254% on Monday, according to Tradeweb. Investors are looking
ahead to the release of minutes of the Federal Reserve's May
meeting on Wednesday.
Some investors are speculating that the central bank could hold
interest rates steady at its June meeting following the recent
decline in the dollar and Treasury yields. But others say the Fed
is on track to continue raising rates.
"We think they're going to go in June. There seems [to be] no
reason for them not to -- the economy seems strong," said Mr. Bell,
who foresees bond yields rising in the coming months.
Investors will also be keeping an eye on forthcoming economic
data releases, including new-home sales for April due on Tuesday,
as well as durable goods orders and revised gross domestic product
growth figures for the first quarter on Friday.
--Ese Erheriene contributed to this article.
Write to Christopher Whittall at
christopher.whittall@wsj.com
(END) Dow Jones Newswires
May 23, 2017 09:56 ET (13:56 GMT)
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