Dow Jones index closes above 27,000

Marco Green
July 12, 2019

That pulled bond prices lower, sending yields sharply higher.

Steep losses in drugmakers and real estate companies were offset by gains for banks and technology companies.

MSCI's broadest index of world stocks .MIWD00000PUS rose 0.42%, with U.S. equities touching record highs following the release of prepared remarks for Powell's testimony before the U.S. House of Representatives Financial Services Committee.

However, US stock futures pared gains and Treasuries retreated after the latest American inflation reading came in higher than anticipated.

A 5.5% gain in UnitedHealth Group Inc (UNH.N) helped the Dow close above 27,000 points for the first time.

At the same time, drugmakers such as Merck & Co Inc (MRK.N) and Pfizer Inc (PFE.N) dropped and the Nasdaq biotech index.NBI fell 1.7%.

Ms Maris Ogg from Tower Bridge Advisors thinks the Fed will undertake a 25 basis point cut in interest rates this month.

In his semiannual Monetary Policy Report to Congress, the Fed chair said global crosscurrents related to growth and trade had reemerged since policymakers met in May, with apparent progress on trade having since turned into greater uncertainty and with the central bank's contacts in business and agriculture reporting heightened concerns over trade developments.

Chipmaker Nvidia climbed 1.7% early Thursday and AT&T rose 0.6%.

The dollar index, which measures the greenback against a basket of six major currencies, edged lower on the Fed rate-cut prospects. Inflation has remained muted through much of the economy's 10-year expansion, which Powell has said cited as a justification for potentially lowering rates.

U.S. Treasury prices fell, lifting the two-year yield 3 bps higher to 1.85% and the 10-year yield up 6 bps to 2.12%.

US Treasuries now yield higher than Greece, after the European Central Bank (ECB) has signalled the second wave of quantitative easing given a slowdown in Europe's export-driven economy. "But then we had this Treasury auction, which apparently didn't go so hot". "Investors are starting to get anxious as the (U.S.) election season approaches, and the first and most prominent punching bag is pharma".

Spot gold fell 0.80% to $1,407.40 an ounce on stronger-than-expected US inflation data.

The move gave drugstore chains and health insurers a boost, however.

Chipmaker Nvidia climbed 4.5% and Goldman Sachs rose 1.8%.

Shares of Delta Air Lines rose almost 1.2 percent, after the Atlanta-based airline posted second-quarter earnings that beat analysts' estimates. Bed Bath & Beyond and Fastenal slumped on disappointing results.

The healthcare index, which is the worst performing S&P sector this year, was off 0.26%.

The S&P 500 is up 493.06 points, or 19.7%.

The pair stalled its recent downward trajectory and managed to find some support ahead of the 0.6900 handle in the wake of a modest US Dollar pullback from multi-week tops.

Other reports by Click Lancashire

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