Daily Management Review

Nasdaq jumps to a record high


US stock indices rose on Thursday. Nasdaq Composite jumped to a record high on the basis of trading results due to the rise in the share price of information technology companies.

Indicators of 10 of the 11 major S&P 500 industry groups increased at the market closure; the subindex of the technology sector became the leader of growth, adding 1.8%.

Microsoft shares rose 2.2%, to a record level, Cisco Systems - by 2.3%, Intel - also by 2.3%, Apple - by 1.7%.

The US stock market was supported by signals that the US and China are open to resumption of negotiations in the trade sphere.

Deputy Minister of Commerce of the People's Republic of China, Wang Shouwen, said that there is a need to discuss the problem in the trade sphere. "We need to try to sit down and find a solution," he said in an interview with Bloomberg.

Meanwhile, US President Donald Trump's team is also talking about the desire to resume talks with the PRC at the highest level, experts say.

Markets go up "in connection with hopes for the resumption of talks between Washington and Beijing," said Think Markets analyst Naeem Aslam. "There is a hope that the US and China will be able to solve the problem through a bilateral agreement, but so far none of the parties has been ready to raise the white flag. In this connection, I think that in the decision should not be expected in the foreseeable future," says the expert.

Quotations of shares of companies, which are largely oriented to world trade, grew on the basis of trading results. The cost of Boeing papers rose by 1.6%, Caterpillar - by 2%.

Statistics, published on Thursday, pointed to a jump in inflation in the US to a 6-year high. This may increase expectations that the Fed will raise the rate two more times in 2018, that is, it will bring the total number of rate increases this year to 4, experts say.

Consumer prices (CPI) in the US in June 2018 jumped 2.9% compared with the same month last year, the Ministry of Labor said. Thus, the annual inflation rate, coinciding with the market expectations, was the highest since 2012.

However, prices increased by 0.1% compared with May, while experts expected a rise of 0.2%.

Prices excluding the cost of energy and food (Core CPI) in June rose by 0.2% compared to May and by 2.3% compared to the same month last year. The consensus forecast assumed an increase of 0.1% and 2.3%, respectively.

The number of new applications for unemployment benefits in the US last week fell by 18 thousand and amounted to 214 thousand, which is the minimum since early May, according to a report of the US Department of Labor.

"The market has experienced some relief, we see a rise in stock prices in the technology sector as well as in other segments, as the underlying economic factors remain quite strong," notes Aberdeen Standard Investments.

Shares of Broadcom fell in price by 13.7% following the results of trades on Thursday. Broadcom, one of the world's largest manufacturers of microchips, announced the acquisition of software developer CA Inc. for $ 18.9 billion. The company intends to pay $ 44.5 per share of CA, which is 20% higher than the closing quotes on Wednesday.
On Friday, a number of large banks - Wells Fargo, JPMorgan Chase & Co. and Citigroup - will publish financial reports for the past quarter. Shares of Wells Fargo fell 0.1% on Thursday, while the other two banks went up by 0.4% and 0.9%, respectively.

The Dow Jones Industrial Average on Thursday increased by 224.44 points (0.91%) to 24924.89 points.

Standard & Poor's 500 climbed 24.27 points (0.87%) to 2798.29 points.

Nasdaq Composite added 107.3 points (1.39%) and amounted to 7823.92 points.

source: bloomberg.com