While you were sleeping: Wall Street moves higher

Tuesday 21st November 2017

Wall Street climbed amid optimism that the outlook for corporate profits and economic growth justify valuations as the Trump administration aims to move ahead on its tax reform plans.

“Very near term, stocks face cross currents associated with year-end tax-related strategies as well as a potential postponement in tax reform legislation that could cause the pause in the rally to linger,” Bruce Bittles, chief investment strategist at Baird, said in a note Monday, Bloomberg reported. “But any weakness that does develop is anticipated to be limited in both time and price.”

In 12.24pm trading in New York, the Dow Jones Industrial Average added 0.4 percent. However, the Nasdaq Composite Index slipped 0.05 percent. In 12.08pm trading, the Standard & Poor’s 500 Index rose 0.2 percent.

“Wall Street is looking for the next catalyst to move higher,” Brent Schutte, chief investment strategist for Northwestern Mutual Wealth Management Company, told Reuters.

“And right now, the one that’s on the docket is tax reform," according to Schutte. "But the question is how much longer can we go higher and how much longer can the cycle last, and tax reform plays an impact in that.”

The Dow advanced as gains in shares of 3M and those of the Home Depot, recently up 1.8 percent and 1.6 percent respectively, outweighed declines in shares of Merck and those of General Electric, recently down 2.3 percent and 1.8 percent respectively.

Shares of Merck declined as those of its Swiss rival Roche Holding rallied, closing 5.9 percent higher in Zurich. Roche announced successful results in two studies on cancer and hemophilia treatments.

“Roche has delivered a best-case scenario,” Jeffrey Holford, an analyst with Jefferies in London, wrote in a note on Monday, Bloomberg reported. Investors had been skeptical about both studies, according to Holford.

In recent corporate deal news, shares of Cavium jumped, up 9.9 percent as of 12.32pm in New York, after Marvell Technology said it agreed to buy the company for about US$6 billion. Marvell shares also rallied, recently up 5.7 percent.

"This is an exciting combination of two very complementary companies that together equal more than the sum of their parts," Marvell Chief Executive Officer Matt Murphy said in a statement. "This combination expands and diversifies our revenue base and end markets, and enables us to deliver a broader set of differentiated solutions to our customers."

Investors are eyeing fresh clues on the pace of interest rate increases next year amid firm expectations the Federal Reserve will hike next month. Fed Chair Janet Yellen is set to speak in New York on Tuesday while minutes of the most recent Federal Open Market Committee meeting will be released on Wednesday.

US financial markets will be closed on Thursday for the Thanksgiving holiday and will be open for only part of Friday.

In Europe, the Stoxx 600 Index finished the day with a 0.7 percent gain from the previous close.

The UK’s FTSE 100 Index rose 0.1 percent, while France’s CAC 40 Index moved 0.4 percent higher, and Germany’s DAX Index climbed 0.5 percent.

(BusinessDesk)

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