US stocks rallied across the session and into the close with lower interest rate expectations and a fresh all time high from Apple lifting the Dow to rack up its 6th straight win, its longest winning streak since February.
Apple has had a phenomenal week and a half, in which it has gained over 17%, putting it on track for a record breaking winning streak. The rally, which started just prior to Apple reporting quarterly earnings and a $100 billion share buyback has also been propped up by comments from Warren Buffet as his firm Berkshire Hathaway (NYSE:BRKa) brought up another 75 million shares in Apple. Should Apple continue in the current form, we could soon be looking at the first listed firm to achieve a $1 trillion market cap.
US Inflation falls short
US inflation at wholesale level missed forecasts earlier in the week; inflation at consumer level also fell short of forecasts in the previous session, which was sufficient for investors to ease back on their inflation and future interest rate expectations. At the prospect of a slightly less aggressive Fed, treasury yields eased pulling the dollar away from its 2018 high and US stocks rallied. The Dow’s gains of 0.8% brought it to 24,739 whilst the S&P 500 closed 0.9% higher and the NASDAQ gained 0.8%.
Sentiment in the US has improved considerably over a short space of time. The markets are now moving ahead in a more seamless fashion, as previous geopolitical concerns fade; the US Steel and Aluminum tariff issues and China trade concerns already seem a long way in the distance and the markets have so far shrugged off US President Donald Trump’s withdrawal from the Iran nuclear deal. However, this quick change in sentiment begs the question whether the stability can last. So far, the back drop doesn’t look to be one that will harvest the next bull run.
Pound Claws Back BoE Losses
The strong session on Wall Street is expected to wash over into Europe with futures pointing to a higher start. After the packed UK economic calendar on Thursday, Friday is in danger of looking a little dull. There is no influential UK data for pound traders to digest, which given the recent spout of dire data, could be a good thing. GBP/USD has clawed its way back after a sharp BoE inspired sell off and it currently targeting $1.3550.
Draghi at EU State of the Union address
The most inspiring event in the European session could be an appearance by ECB Chief Mario Draghi, when he speaks at the EU State of the Union address in Florence. Draghi is expected to talk up the eurozone economy, despite economic data starting to prelude to a slowdown in momentum. Yet even if the message is talking up the economy we expect him to do so in a cautious tone. His overriding message will most likely support the idea that stimulus in the bloc is set to continue for a while.
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