This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.nytimes.com/2020/01/09/business/stock-market-record.html

The article has changed 2 times. There is an RSS feed of changes available.

Version 0 Version 1
U.S. Stocks, in a Sweet Spot, Hit a New High U.S. Stocks, in a Sweet Spot, Hit a Record
(about 4 hours later)
Stocks in the United States leapt to a record on Thursday, as investors spotted a rosy backdrop for the market despite recent chaos in the Middle East. Stocks in the United States leapt to a record on Thursday, as investors looked past recent chaos in the Middle East and saw a rosy backdrop for the market.
The gains reflected growing confidence among investors that, even after surging nearly 30 percent last year, the stock market remains in something of a sweet spot: Interest rates are low, American unemployment is near a 50-year low, and consumer confidence is high. The trade war with China — a big boogeyman for investors — appears to be simmering down, and companies claim to see an improving outlook for profits and the global economy. The gains reflected growing confidence that, even after surging nearly 30 percent last year, the stock market remains in something of a sweet spot: Interest rates are low and the Fed is unlikely to raise them soon, American unemployment is near a 50-year low, and consumer confidence is high. The trade war with China — a big boogeyman for investors — appears to be simmering down, and some companies claim to see an improving outlook for profits and the global economy.
Aside from the specter of a potential military confrontation with Iran — which investors have decided is somewhat less likely after comments from President Trump on Wednesday — what’s not to like?Aside from the specter of a potential military confrontation with Iran — which investors have decided is somewhat less likely after comments from President Trump on Wednesday — what’s not to like?
“The economy seems to be doing better and interest rates are going to stay low,” said Bruce Bittles, chief investment strategist at money management firm Baird. “So that’s a good combination.”“The economy seems to be doing better and interest rates are going to stay low,” said Bruce Bittles, chief investment strategist at money management firm Baird. “So that’s a good combination.”
Shortly after the open of trading the S&P 500 was up 0.5 percent, above a high reached on Jan 2. Technology companies and financial shares led the gains. The Nasdaq touched a record for the second straight day, rising 0.9 percent. There are, of course, some things that ought to give wild-eyed bulls pause. American companies will begin to report their quarterly results next week, and those earnings could fail to live up to the optimism that drove the market higher last year. Though the tension between the United States and Iran has cooled, the situation is far from settled. And there’s always the chance that the apparent cease-fire in the trade war ends in a flurry of presidential tweets announcing new tariffs.
Apple and Microsoft — which have outsize sway because of their $1 trillion-plus market capitalization — were up 1.7 percent and 0.9 percent. Two slightly smaller tech behemoths, Alphabet and Amazon, were both up more than 1 percent. But investors have looked past a number of risks for months, even as the United States and Iran stood on the brink of an all-out war in the past week. Thursday was no exception. The S&P 500 rose 0.7 percent, above a high reached on Jan 2. Technology companies and financial shares led the gains. The Nasdaq touched a record for the second straight day, rising 0.8 percent.
Apple and Microsoft — which have outsize sway because of their $1 trillion-plus market capitalization — were up 2.1 percent and 1.3 percent.
Apple was buoyed by reports of increased shipments of iPhones to China, in the run-up to the important lunar new year gift giving season later this month.Apple was buoyed by reports of increased shipments of iPhones to China, in the run-up to the important lunar new year gift giving season later this month.
Semiconductors stocks, which were battered by the trade war between China and the United States last year, were also rising on Thursday.Semiconductors stocks, which were battered by the trade war between China and the United States last year, were also rising on Thursday.
Advanced Micro Devices, a chip maker sensitive to the trade fight, was up more than 4 percent, after analysts at Mizuho Securities placed a buy rating on the shares. The analysts cited their expectations for a surge of corporate spending on servers in 2020 “especially as U.S.-China tensions improve.” Advanced Micro Devices, a chip maker sensitive to the trade fight, was up 2.4 percent, after analysts at Mizuho Securities placed a buy rating on the shares. The analysts cited their expectations for a surge of corporate spending on servers in 2020 “especially as U.S.-China tensions improve.”
Such moves underscore a relaxation in the fight between the world’s two largest economies. China’s Commerce Ministry official confirmed on Thursday that the nation’s economic czar will visit Washington next week to sign an interim trade deal. Improvement in the trade fight could be a boon to the global economy, which has slowed sharply in recent years. Such moves underscore a relaxation in the fight between the world’s two largest economies. China’s Commerce Ministry confirmed on Thursday that the nation’s top trade negotiator will visit Washington next week to sign an interim trade deal. Improvement in the trade fight could be a boon to the global economy, which has slowed in recent years.
That slowdown has been a drag for American manufacturers, too. But there’s little indication of a slowdown in American consumer spending, which is buttressed by low unemployment rates. At 3.5 percent, the jobless rate is near the lowest levels seen in 50 years. Economists expect that data to be released on Friday will show it remained at 3.5 in December. That slowdown has been a drag for American manufacturers, too. But there’s little indication of a slump in American consumer spending, which is buttressed by low unemployment rates. At 3.5 percent, the jobless rate is near the lowest levels seen in 50 years. Economists expect that data to be released on Friday will show it remained at 3.5 percent in December.
Low levels of unemployment would traditionally be nudging policymakers at the Federal Reserve to lift interest rates, to head off an outbreak of inflation, but this time is different.Low levels of unemployment would traditionally be nudging policymakers at the Federal Reserve to lift interest rates, to head off an outbreak of inflation, but this time is different.
With little indication that inflation is set to rise meaningfully, the Fed — which has faced an unusual level of public criticism from Mr. Trump — is saying it is in no hurry to lift rates, which stock investors typically see as a kind of death knell for market rallies.With little indication that inflation is set to rise meaningfully, the Fed — which has faced an unusual level of public criticism from Mr. Trump — is saying it is in no hurry to lift rates, which stock investors typically see as a kind of death knell for market rallies.
There are hurdles ahead. Starting next week, companies will begin to release the bulk of numbers for sales and profits during the fourth quarter. A 28.9 percent rise in the S&P 500 last year was driven in part by a sense that profit growth would hold up well in 2020. If the coming updates paint a different picture, stocks could be in for an abrupt adjustment.
To see how abrupt, just look at what happened to Kohl’s on Thursday. Shares of the department store chain tumbled 6.5 percent after it reported falling sales during the crucial holiday period and, as a result, said full-year profit would be toward the bottom of the range it had previously forecast.
Results from other retailers also fell short of expectations; shares of Macy’s fell 2.2 percent.
Still, the market’s solid start in 2020 — it’s up 1.4 percent so far — suggests that investors are not overly concerned about broader indexes hitting similar air pockets any time soon.
“There’s nothing that tells me that we’re at a peak and the market can’t go higher,” said Mr. Bittles of Baird.