U.S. Stocks Climb, Led by Tech Sector
June 26 2017 - 10:35AM
Dow Jones News
By Christopher Whittall and Kenan Machado
U.S. stocks rose Monday, boosted by gains in shares of
technology companies.
It's the fourth straight session of gains for tech stocks in the
S&P 500, following some weakness earlier in the month. The
sector rose 0.7% in early trading.
The S&P 500 and Dow Jones Industrial Average each added 0.4%
Monday. The Nasdaq Composite advanced 0.5% shortly after the
opening bell.
Stocks advanced around the world. The Stoxx Europe 600 rose
0.8%, as investors scooped up European banking stocks after Italian
authorities said Sunday they were prepared to spend as much as
EUR17 billion ($19.03 billion) as part of the shutdown of two
regional banks.
Italian banks have been a concern for years, weighed down by bad
loans, low profitability and insufficient capital. Their troubles
have cast a shadow over the wider European banking system, which
accounts for a large chunk of regional equity benchmarks.
"It is a very significant step," said Isabelle Mateos y Lago,
chief multiasset strategist at BlackRock.
"If finally the issue of [bad loans in] the Italian banking
system and overcapacity in some of the regional banks is being
addressed, it is a very positive signal," she added.
The Stoxx Europe 600 Banks subindex gained 1.5%. Shares in
Intesa Sanpaolo, which is set to buy the best assets of two
troubled Italian lenders for a token fee, rose 4.8%. Shares in
Italy's largest lender, UniCredit, gained 3.3%.
Elsewhere in Europe, food and beverage shares logged strong
gains following news that billionaire activist investor Daniel
Loeb's Third Point hedge fund has taken a $3.5 billion stake in
Nestlé. Shares in Nestlé added more than 4%.
A stabilization in oil prices added to the positive tone in
markets on Monday. U.S. oil prices entered a bear market last week
after falling more than 20% from their February high. That slump
came amid a persistent glut in crude prices despite moves to limit
production from the Organization of the Petroleum Exporting
Countries.
U.S. crude oil rose 0.4% to $43.16 a barrel. The S&P 500
energy sector fell 0.1% and oil and gas shares in the Stoxx Europe
600 climbed 0.2%.
In early 2016, a sharp decline in oil prices pushed down major
stock indexes as investors worried about the knock-on effects of
rising defaults in the energy sector. The energy market is also
crucial for the earnings recovery in the U.S., where the sector is
expected to account for nearly half of the S&P 500's earnings
growth in the second quarter, according to FactSet.
Gold prices slid as investors shunned havens and moved into
riskier assets. Prices were recently down 0.9% at $1,245.50 an
ounce. The Swiss franc and the Japanese yen, which tend to decline
when riskier assets rally, were both lower against the dollar.
Elsewhere in currency markets, the British pound rose slightly
after the ruling Conservative Party reached an agreement with
Northern Ireland's Democratic Unionist Party to support Prime
Minister Theresa May's minority government. The pound was recently
up 0.2% against the dollar at $1.2745.
The yield on the 10-year Treasury note was recently at 2.127%,
according to Tradeweb, compared with 2.146% Friday. Yields fall as
prices rise.
Investors are looking ahead to a raft of inflation data out of
Europe and the U.S. this week. Signs that inflation has softened
have pushed down bond yields in recent weeks.
"We think we're in a bit of a goldilocks environment," said Ms.
Mateos y Lago, with strong economic growth and lukewarm inflation.
That means central banks shouldn't rush to raise interest rates,
she said.
"Frankly, that is a great environment to be in risk assets
globally," she said.
In Asia, the Shanghai Composite Index rose 0.9%, with Chinese
stocks continuing to perform strongly following MSCI's decision to
add them to its indexes. Gains there also helped boost Hong Kong
equities on Monday. The Hang Seng Index rose 0.8%.
Meanwhile, Taiwan's tech-heavy Taiex index gained 1.3% to hit
fresh 27-year highs.
In Japan, the Nikkei Stock Average rose 0.1%, with financial
stocks weighing on the broader index. Signs that interest rates
will remain low continue to weigh on Japanese financials, said
Hisao Matsuura, chief strategist for equities at Nomura Japan.
Write to Christopher Whittall at christopher.whittall@wsj.com
and Kenan Machado at kenan.machado@wsj.com
(END) Dow Jones Newswires
June 26, 2017 10:20 ET (14:20 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.