While you were sleeping: Nasdaq climbs to record

Friday 19th June 2015

Wall Street rose, pushing the Nasdaq Composite Index to a record, amid optimism US Federal Reserve policy makers are in no rush to raise interest rates. while the American economy is doing well.

Fed Chief Janet Yellen’s comments on Wednesday suggested policy makers might lift its benchmark rate just once this year.

"While we cannot be certain, our best guess is that Fed Chair Yellen now anticipates only one increase this year, an important shift in the committee’s centre of gravity," Goldman Sachs economists Jan Hatzius and Zach Pandl wrote in a note advising clients they now expect the Fed to wait until December to raise rates, from September previously, Reuters reported.

In late trading in New York, the Dow Jones Industrial Average climbed 1.1 percent, the Standard & Poor’s 500 Index gained 1 percent, while the Nasdaq Composite Index rallied 1.3 percent. Earlier in the session, the Nasdaq rose as high as 5,143.32, a record.

Advances in shares of 3M and those of Travelers Cos, last trading 1.9 percent and 1.8 percent higher respectively, helped propel the Dow higher.

Consumer prices excluding food and fuel gained a smaller than expected 0.1 percent, Labor Department figures showed.

"We think inflation will grind higher over the summer and open the door to a September rate hike,” Thomas Costerg, a US economist at Standard Chartered Bank in New York, told Reuters. “At the same time, low underlying inflation pressures mean the tightening cycle will only be gradual.”

Another Labor Department report showed initial claims for state unemployment benefits fell 12,000 to a seasonally adjusted 267,000 for the week ended June 13.

Meanwhile, shares of Fitbit soared in its first day of trading, climbing more than 50 percent from its initial public offering price of US$20.

"Fitbit's success will be closely watched, just like the sales of the Apple watch, to really give investors a better sense of how viable and sustainable this market is," CLSA analyst Ed Maguire told Reuters.

In Europe, the Stoxx 600 Index finished the session with a 0.1 percent gain from the previous close. France’s CAC 40 Index added 0.3 percent, the UK’s FTSE 100 Index rose 0.4 percent, while Germany’s DAX climbed 1.1 percent.

A gathering of eurozone finance ministers did not produce a deal on Greece. The stalemate prompted the scheduling of an emergency summit on Monday in Brussels as a June 30 deadline for Greece to make a debt payment rapidly approaches.

“It is time to urgently discuss the situation of Greece at the highest political level,” European Council President Donald Tusk said in a statement.

"Greece is a risk that’s still bubbling away. We’ve been down this road before, markets will want to tread carefully until we get to the real endgame,” Peter Dixon, an economist at Commerzbank in London, told Bloomberg.

BusinessDesk.co.nz

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