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S&P 500 Sets Record High as Fed Signals Interest Rate Cuts, Oil Prices Surge – TheStreet.com

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  • The S&P 500 set an intraday record high Thursday as investors were spurred on by signals of lower interest rates from the Federal Reserve.
  • Oracle (ORCLGet Report) rose after the enterprise software company topped analysts’ earnings and revenue expectations for its fiscal fourth quarter, and said first-quarter profit likely would top forecasts. Oracle is Real Money’s Stock of the Day.
  • Tesla (TSLAGet Report) shares fell after analysts at Goldman Sachs cut their price target on the stock while arguing that Wall Street demand forecasts for the clean-energy carmaker likely are too optimistic.

Wall Street Overview

The S&P 500 set an intraday record high Thursday as investors were spurred on by signals of lower interest rates from the Federal Reserve and as unrest in the Strait of Hormuz and a presidential tweet sent oil prices climbing.

The S&P 500 surpassed its April 30 closing record of 2,945.64 and was up recently by 0.64% to 2,945. The Dow Jones Industrial Average climbed 171 points, or 0.65%, to 26,675, roughly 150 points shy of its own record of 26,828.39. The Nasdaq was up 0.62%.

Fed Chairman Jerome Powell and his colleagues on the Federal Open Market Committee dropped a reference that they would be “patient” in monitoring incoming data in a statement Wednesday, following the central bank’s decision to hold interest rates steady. The Fed instead said it would act “as appropriate” in order to sustain an economic expansion of nearly 10 years.

Powell defied President Donald Trump by holding rates steady, but he did prime the market for multiple rate cuts between now and the end of the year.

“Stocks’ resilience in the face of growing U.S.-Iranian geopolitical tension is a stark reminder not to fight the Fed,” said Alec Young, managing director of global markets research, FTSE Russell. “As the central bank’s dovish messaging continues to drive interest rates lower, it’s inoculating investors from other risks as the cost of capital and competition from bonds both fall. It will be interesting to see if this continues should next week’s G20 meeting fail to live up to investors’ lofty expectations for a US-China trade breakthrough.”

Oil prices rose sharply Thursday after the United States confirmed a naval surveillance drone was shot down over the Strait of Hormuz by an Iranian missile. Prices surged even more when Trump tweeted, “Iran made a very big mistake!”

“The president’s tweet sent oil another leg higher breaking it out of its short-term downtrend,” said Phil Flynn, an analyst at Price Futures Group in Chicago. “The odds of a conflict is rising and if the fighting involves the Strait of Hormuz it could get very dangerous. Of course, the Fed and strong demand is helping as well.”

Brent crude was up 3.85% to $64.20 a barrel, while West Texas Intermediate crude rose 5.45% to $56.21 a barrel. 

The news had oil stocks rising, with such companies as ExxonMobil (XOMGet Report) , Chevron (CVXGet Report) , and Noble Energy (NBLGet Report) all posting gains.

Oracle (ORCLGet Report) rose 8.1% to $57.97 after the enterprise software company topped analysts’ earnings and revenue expectations for its fiscal fourth quarter, and said first-quarter profit likely would top forecasts. Oracle is Real Money’s Stock of the Day.

Tesla (TSLAGet Report)  shares fell 2.7% to $220.35 after analysts at Goldman Sachs cut their price target on the stock while arguing that Wall Street demand forecasts for the clean-energy carmaker are likely too optimistic.

Shares of Darden Restaurants (DRIGet Report) fell  almost 1% to $118.39 after the operator of Olive Garden, Longhorn Steakhouse and Cheddar’s Scratch Chicken restaurant chains missed Wall Street’s fourth-quarter earnings expectations.

Kroger ( KRGet Report) shares fell 1.1% to $23.38 after the grocery store chain reported fiscal first-quarter earnings just ahead of analysts’ forecasts amid improving sales of its Kroger-branded products, though not enough to impress shareholders.

The New York Stock Exchange set the reference price for Slack Technologies’ direct public offering Thursday at $26. The workplace messaging platform’s DPO bypasses the traditional underwriting process. Slack will trade under symbol ” (WORK) .”

In economic news, the Philadelphia Federal Reserve’s manufacturing index fell to 0.3 in June from 16.6 in May, the lowest read since February, when the index fell to hit zero. Initial jobless claims, a rough way to measure layoffs, fell by 6,000 to 216,000 in the seven days ended June 15. Economists were expecting estimated new claims to total a seasonally adjusted 220,000.

Canopy Growth (CGCGet Report) , whose shareholders approved a $3.4 billion merger with U.S. cannabis company Acreage Holdings (ACRGF)  on Wednesday, is scheduled to report earnings after Thursday’s closing bell.

Watch: Canopy Has Some Built in Advantages Over Cannabis Competitors

What Jim Cramer Doesn’t Like About Slack’s Direct Listing

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