Market Outlook – August 28, 2018

S&P 500 and Nasdaq Close at Record Highs


As predicted prior to the market’s opening bell, Wall Street extended its record bull run on Monday. The Nasdaq Composite Index closed above the 8,000 mark for the first time with the tech-heavy index advancing 71.92 points (+0.91%) to end at a record high of 8,017.89.

The S&P 500 Index also closed at a record high with the broader index gaining 22.05 points (+0.77%) to close at 2,896.74. Meanwhile, the Dow Jones Industrial Average is closing in on its high of 26,616.71 registered in January. The blue-chip benchmark added 259.29 points (+1.01%) to finish the session at 26,049.64.

U.S. and Mexico Reaches New Trade Accord


U.S. President Donald Trump was ecstatic on Monday. He announced that a revised trade agreement with Mexico has been reached. There were revisions on the key portions of the North American Free Trade Agreement (NAFTA). Both parties expect to finalize the preliminary agreement in a matter of days.

Trump added that it is possible this trade pact could replace NAFTA. Canada is the third country in the trilateral trade pact but was not part of the discussions. Trump wishes to change the name NAFTA because he considers it the “worst” trade deal in history.

He prefers to name it the United States-Mexico Trade Agreement. Should Canada continue to negotiate unfairly, Trump plans to impose auto tariffs. The main meat of the trade pact, which permits U.S. companies to operate in Mexico and Canada without tariffs, remains intact.

Starbucks and Nestle Completes Licensing Deal


Nestle will soon sell Starbuck Inc.’s (SBUX) products such as Starbucks, Seattle’s Best Coffee and Teavana TM/MC outside of the American company’s coffee shops. The two companies jointly announced on Tuesday that they had concluded their $7.15 billion licensing deal.

The Swiss food giant has been granted perpetual rights to market and sell the U.S. coffee maker’s packaged coffees and teas around the world. This set up would mean moving about 500 Starbucks employees to Nestle.

Berkshire Hathaway Acquires Stake in India’s Paytm


Berkshire Hathaway Inc. (BRKa) has made its first investment in an Indian startup belonging to the financial payments sector. The conglomerate run by billionaire Warren Buffett bought a $356 million stake in the parent of digital payments firm Paytm.

The investment in One97 Communications Ltd. was confirmed through an email by Buffett’s assistant Debbie Bosanek. But no details were released. India’s Economic Times reported on Monday that Berkshire was intending to take on a 3% to 4% stake. The deal is a huge endorsement for Paytm. The company is just 8 years old but is now the leading digital payments platform in India.

Toyota to Invest and Work with Uber on Self-Driving Cars


Toyota Motor Corp. and Uber Technologies Inc. announced on Monday that they will jointly work on developing self-driving cars. The Japanese carmaker will also be investing $500 million in Uber. Their objective is to catch up to rivals in the highly competitive autonomous driving business.

Both Toyota and Uber have been lagging in developing self-driving cars. Uber’s CEO Dara Khosrowshahi wants to develop autonomous vehicles via a partnership with one of the world’s largest carmaker rather than do it on its own.

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