The S&P 500 and the Nasdaq hit new all-time highs on Wednesday, led by strong earning reports and a rally in the tech sector, specifically in the semiconductor arena. The Nasdaq closed up 0.85 percent while the S&P 500 was up 0.47 percent. The Dow Jones Industrial Average did not share the gains of its counterparts, falling 0.29 percent on the day due largely to losses from Boeing and Caterpillar. Boeing’s losses were attributed to its safety struggles last quarter that has kept its 737 Max jets grounded. Caterpillar’s losses can be attributed in part to the tariffs between the United States and China which has resulted in rising costs.
Yet despite these losses, analysts largely believe that earnings season is off to a strong start; with nearly 25 percent of S&P stocks reporting, and 78 percent of those showing better than expected profits.
Asian stocks took a cue from Wall Street on Thursday, trading mixed in the early morning. The Shanghai Composite was down 0.05 percent as of 10:27 a.m. HK/SIN, and South Korea’s Kospi was down 0.88 percent. The biggest gains were seen by the Nikkei 225 which was up 0.27 percent and Australia’s ASX 200 which was up 0.31 percent. Hong Kong’s Hang Seng Index and the Shenzhen Composite also saw modest gains.
Data out of the U.S. on Wednesday showed that manufacturing activity was hovering near 10-year lows early this month, with both production volumes and purchasing levels lower. The slower manufacturing levels coupled with weak housing data has the potential to create economic difficulties and to challenge the current market bull run. Other negative data out on Wednesday showed a reduction in factory employment which brought an end to a six-year period of continued job creation in the manufacturing arena.
Currency Movements
Despite the weak data released on Wednesday, the U.S. dollar was little changed on Thursday morning, with the dollar index trading down just 0.02 percent to 97.71 .DXY. The greenback eased slightly against the yen, down 0.03 percent to 108.14. The dollar was flat against the British pound, and it was down 0.05 percent against the Canadian dollar, to trade at $1.3133.
All eyes are now on the U.S. Federal Reserve which will meet next week and determine whether or not to cut interest rates for the first time in ten years.