Market Outlook – June 21, 2018

Nasdaq Closes at a Record

 

The Nasdaq Composite Index was the bright spot on mid-week as the tech-heavy index rose 55.93 points (+0.7%), carried by a rally in biotechnology stocks. The iShares Nasdaq Biotechnology ETF (IBB) gained 1.7%. The seven of the eleven main sectors of the S&P 500 index closed in positive territory, causing the broader index to finish the session higher by 4.73 points (+0.2%).

The Dow Jones Industrial Average Index posted its longest losing streak since March 2017. It was the seventh straight day the blue-chip index declined. The index fell below 25,000 as it closed 42.41 points (-0.2%). Some analysts view Wednesday’s session as a relief rally. The market volatility is headline-driven but once the headlines fade, markets gradually reverse back.

FAANG Stocks Surge to All-Time Highs

 

The revered FAANG stocks, except for Apple Inc. (AAPL) also surged to all-time highs on Wednesday and contributed to the Nasdaq’s advance.  AAPL only hit a session high of $187.20 but did not break its $194.20 all-time high record registered last June 7.

Online video streaming king Netflix Inc. (NFLX) hit above $400 for the first time ever and closed at $419.17 (+3.5%). Social network giant Facebook Inc. (FB) climbed as much as 3.1% to surpass the $200 threshold for the first time. FB ended the session at $203.55.

Google-parent Alphabet Inc. (GOOGL) erased its $1,198 record posted last January 29 and rose 1.9% to $1,201.49. It was the third session in a row that Amazon.com Inc. (AMZN) hit an all-time high. The stock of the online retail behemoth rose 1.6% to $1,762.93. hitting an all-time high for the third session in row

Fox Accepts Disney’s Counter Offer

 

21st Century Fox (FOX A) rejected Comcast Corp.’s (CMCSA) $65 billion all-cash offer but struck a new merger agreement with Walt Disney Co. (DIS). Disney sweetened its original $52.4 billion all-stock offer which Fox readily accepted.

The amended acquisition agreement stipulates that Disney would purchase Fox assets for $71.3 billion, comprising cash and stock. Comcast is still in a position to bid again because the provision in the agreement that the directors’ can evaluate a competing proposal has not been removed.

Amazon, Berkshire and JPMorgan Announces Head of JV

 

The company being formed by Amazon.com Inc. (AMZN), Berkshire Hathaway Inc. (BRKA), and JPMorgan Chase & Co. (JPM) will be headed by Atul Gawande, a well-regarded surgeon and author. The companies jointly announced the appointment on Wednesday.

Gawande will be tasked to implement the plans that aim to cut U.S. employee healthcare costs. Amazon-Bekshire-JPMorgan said they would use big-data analysis and other high-tech tools to improve care and cut waste. The practicing general and endocrine surgeon at Brigham and Women’s Hospital will assume the post on July 9.

Turkey Engages U.S. in Trade War

 

Turkey has joined the fray and imposed $267 million worth of tariffs on US goods. The tariffs target products such as  cars, coal, paper, rice, tobacco, walnuts, and whiskey.  The Turkish government is retaliating to the steel and aluminum tariffs imposed by the United States.

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