While you were sleeping: Valuations fluctuate

Wednesday 30th September 2015

Wall Street was mixed as investors found value in some beaten-down stocks including biotech shares, even as concern lingered about the global economic outlook.

In New York trading at about 1.30pm, the Dow Jones industrial average rose 0.3 percent, while the Standard & Poor’s 500 Index eked out a 0.08 percent advance. The Nasdaq Composite Index slipped 0.1 percent.

Gains in shares of 3M and those of Johnson & Johnson, last up 1.7 percent and 1.6 percent respectively, led the Dow higher.

"Investors are still very nervous on the global markets," Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago, told Reuters. "I think it's buying of what has done poorly and selling of what has done well in the last two-three days — a little bit of bargain hunting, a little bit of taking advantage."

Even so, Goldman Sachs’ chief US equity strategist David Kostin downgraded his year-end price target for the S&P 500 to 2,000, from 2,100, citing “a slower pace of economic activity in the US and China and a lower oil price than we had been previously assuming.”

US consumers proved more upbeat than expected. The Conference Board’s consumer confidence index climbed to 103.0 in September, from a downwardly revised 101.3 in August.

Shares of Yahoo rose, last up 3 percent, after the company said it plans to go ahead with the spinoff of its stake in Alibaba Group this year after US tax regulators declined the company’s request to confirm if such a transaction would be subject to tax.

"In our opinion, the IRS is maintaining the status quo on this issue, and with no changes to guidance on this matter, we believe that Yahoo should be able to complete this transaction in a tax-free manner," Mizuho Securities analysts wrote in a note, according to Reuters.

Shares of Whole Foods Market rose, last trading 1.6 percent stronger, after the company said it would slash about 1,500 jobs as part of an effort to cut costs.

Investors are trying to gauge the timing of the first US interest rate increase since 2006. Federal Reserve officials including Chair Janet Yellen have repeatedly said they expect to lift rates this year. Economists and investors are divided.

Eighty-four percent of economists surveyed by Bloomberg between September 25 and 28 expect an initial interest-rate increase in December; federal funds futures suggest investors see a 40 percent probability of a rate rise by year end.

US Treasuries held on to recent gains, with yields on the 10-year note at 2.07 percent.

“The greater macro uncertainty led by, but not exclusive to, China has really spooked investors,” James Buckley, a portfolio manager at Baring Asset Management in London, told Bloomberg. “The Fed doesn’t feel able to raise rates yet and there are concerns over whether Europe will be able to continue its very gradual recovery. We will soon be getting into earnings season which focuses more on the micro. I suspect we may have seen the worst of the selling.”

In Europe, the Stoxx 600 Index finished the session with a 0.7 percent decrease from the previous close. France’s CAC 40 Index slid 0.3 percent, Germany’s DAX Index declined 0.4 percent, and the UK’s FTSE 100 Index fell 0.8 percent.

BusinessDesk.co.nz

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