Market Outlook – July 13, 2018

Tech Rally Lifts Main U.S. Benchmarks

 

U.S. stocks closed higher on Thursday to post its fifth gain of the past six trading sessions. The Dow Jones Industrial Average climbed triple digits once more and advanced 224.44 points (+0.9%) to 24,924.89. The blue-chip index is very near to the 25,000 threshold. The Nasdaq Composite Index ended at a record on the strength of internet and technology heavyweights. The tech-heavy index rose 107.3 points (+1.4%) to overshadow the continuing uncertainties over trade.

The day’s gains were broad, with 10 of the 11 S&P 500 sectors The S&P 500 index gained 24.27 points (+0.9%) with 10 of the 11 primary sectors ending higher. The information technology sector rose 1.8% which is its biggest one-day percentage gain since June 1. The rally lifted the sector to record levels.

Apple Inc. (AAPL), Cisco Systems Inc. (CSCO), Intel Corp. (INTC), and Microsoft Corp. (MSFT) lifted the three main benchmarks. Although Boeing Co. (BA) and Caterpillar Inc. (CAT) are deemed sensitive to trade-war fears, their stocks ended higher.

China’s Trade Surplus with U.S. Swells to Record High

 

The trade dispute between Washington and Beijing is likely to intensify. Data in June showed that China’s trade surplus with the U.S. swelled to a record. Overall exports grew at a solid pace. Exporters rushed their shipments before the tariffs took effect in the first week of this month.

Analysts say the sudden spike was a one-off but it’s going to be an unfavorable trade balance for China in the coming months. Duties on exports will begin to bite by then. China’s trade surplus with the U.S. widened from $24.58 billion in May to a record monthly high of $28.97 billion in June.

JPMorgan Posts 18.3% Rise in Q2 Profits

 

JPMorgan Chase & Co. (JPM), the largest U.S. bank by asset size, reported an 18.3% rise in quarterly profit on Friday. The bank attributed the rise to tax gains, a rise in interest rates, and higher trading revenue. JPM’s net income rose from $7.03 billion a year earlier to $8.32 billion in the second quarter ended June 30.

Citigroup Inc. (C) and Wells Fargo & Co. (WFC), the third- and fourth-largest banks by assets, are also set to report their second-quarter earnings today as the earnings season heats up.

DOJ to File Appeal on AT&T-Time Warner Deal

 

Judge Richard Leon ruled last month that the U.S. government had failed to show that the AT&T Inc.’s (T) proposed acquisition of Time-Warner violates antitrust law. However, the US Justice Department said it would file an appeal. With this development, analysts predict a 2% drop in AT&T shares on Friday.

Court Orders Johnson & Johnson to Pay $4.7 Billion

 

A Missouri Court has ordered Johnson & Johnson (JNJ) to pay $4.7 billion in compensation and damages in a case about talcum powder and cancer. The jury ruled in favor of 22 women and their families. According to the complainants’ lawyer, J&J products caused their ovarian cancer.

Johnson & Johnson will pursue all available appellate remedies because they are confident that its products do not contain asbestos and do not cause ovarian cancer.

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