U.S. stocks began the week with solid gains as technology issues led a broad based advance that pushed the Dow and S&P to fresh record highs, while the NASDAQ saw the largest percentage gain for the day. The advance for equities lacked a clear catalyst as the domestic docket was devoid of any major releases today and will remain blank again tomorrow. Treasuries, Gold and crude oil prices were lower and the U.S. dollar was nicely higher.
The Dow Jones Industrial Average (DJIA) rose 145 points (0.7%) to 21,529, the S&P 500 Index advanced 20 points (0.8%) to 2,453, and the NASDAQ Composite rallied 87 points (1.4%) to 6,239. In moderate volume, 801 million shares were traded on the NYSE and 2.0 billion shares changed hands on the NASDAQ. WTI crude oil declined $0.54 to $44.39 per barrel and wholesale gasoline was unchanged at $1.45 per gallon. Elsewhere, the Bloomberg gold spot price decreased $9.17 to $1,244.56 per ounce, and the gollar index, a comparison of the U.S. dollar to six major world currencies, was 0.4% higher at 97.56.
Shares of Valeant Pharmaceuticals International Inc. (NYSE:VRX $13) traded nicely higher, after it was announced that billionaire hedge-fund manager John Paulson, its largest shareholder, will join the board of the struggling drugmaker in an effort to aid in its turnaround. The move comes only months after fellow fund manager Bill Ackman, a long-time champion of VRX, bailed, with the company posting an 80% loss from its peak in 2015 amid drug pricing and accounting scandals.
The NASDAQ jumped back on track after a dismal performance last week, when the index lagged the Dow and S&P 500 due to pressure on technology issues. This week is “Tech Week” at the White House, as President Trump will meet with executives from a number of top technology firms, where he is expected to solicit their help in speeding up the process of modernizing the federal government’s technology, as well as discussions on cyber-security.
Slow start to week’s economic calendar
Treasuries finished lower with the economic calendar void of any major releases today. The yields on the 2-Year and 10-Year notes were 4 basis points (bps) higher at 1.36% and 2.19%, and the 30-Year bond rate was up 1 bp at 2.79%.
Treasury yields have been in a trading range lately amid a host of domestic and European political uncertainty, mixed economic data, and last week’s highly-expected rate hike by the Fed and details of the process in beginning to shrink its inflated balance sheet sometime this year.
The economic calendar is sparse this week, with tomorrow’s ledger also bare, while later in the week investors will get some housing data with the releases of new and existing home sales, as well as weekly MBA Mortgage Applications. Manufacturing and business activity will also be on tap, with data from Markit's preliminary Manufacturing and Services PMIs and the Kansas City Fed Manufacturing Index. Other reports of note include weekly initial jobless claims and the Index of Leading Economic Indicators.
As well, a number of Federal Reserve officials are slated to speak at various engagements throughout the week.
Equities in Europe and Asia end higher
European equities finished broadly higher, with politics taking center stage, while also getting a tailwind from last week’s extension of loan agreements to Greece by its creditors that ended speculation over whether the country would be able to meet large bond payments coming due in July. The second round of parliamentary elections in France over the weekend ushered in a solid win for newly-elected President Macron, with his Republic on the Move party, along with an ally in the Modem centrist party, producing an absolute majority, paving the way for easy passage of Macron’s reform program.
The British pound was modestly lower versus the U.S. dollar, as Brexit negotiations began in Brussels today, and amid a cloud of uncertainty in the U.K. following reports over the weekend that the nation’s senior conservative leaders are preparing to initiate a challenge to Prime Minister May’s leadership if she softens her stance on Brexit. The euro also lost modest ground versus the greenback and bond yields in the region were lower. Amid the political turmoil overseas, including upcoming elections in Italy and Germany later this year. Economic news was sparse, with April industrial output in Italy declining and housing prices in the U.K. ticked lower for June.
Stocks in Asia began the trading week higher across the board on the heels of Friday's fresh high for the Dow in the U.S., as well as optimism in China with regard to an upcoming MSCI decision. Japanese equities increased, with the yen gliding lower during the session and following a report that showed an unexpected trade deficit, as the nation's imports exhibited surprising strength, while exports fell short of expectations.
Mainland Chinese stocks rose and shares trading in Hong Kong jumped amid increased hopes that MSCI will include the Asian nation’s A-shares in its emerging markets indexes when it announces its decision later this week, while showing little reaction to data that showed housing prices continue to steadily rise. Australian securities returned from a long holiday weekend to finish higher, despite Moody’s downgrade of twelve of the nation’s lenders, including its four largest banks, while Indian listings traded higher and South Korean equities gained ground.
The international docket for tomorrow will include department store sales from Japan, leading indicators from China, house price data from Australia, PPI from Germany and the current account for the Eurozone.