Arthur J. Villasanta – Fourth Estate Contributor
New York, NY, United States (4E) – It was a heady day for Wall Street yesterday (July 12) amid all the economic and political turmoil ignited by Donald Trump.
The Dow Jones Industrial Average rose 224.44 points, or 0.91 percent, to 24,924.89. The S&P 500 gained 24.27 points (up 0.87 percent) to 2,798.29 while the NASDAQ Composite added 107.31 points, or 1.39 percent, to 7,823.92.
Top technology firms reached record highs while industrials rebounded from losses fueled by the simultaneous trade wars launched by Trump on the rest of the world. Facebook, Microsoft and Amazon hit all-time highs and, along with Apple and Alphabet, drove gains in the S&P 500 and NASDAQ.
Microsoft’s stock market value rose 2.2 percent to $104.19, giving it a total valuation above $800 billion for the first time. It now joins Apple, Amazon and Alphabet in the exclusive $800 billion club and places Microsoft in line as a contender to be the first U.S. company to reach a $1 trillion market cap.
A big mover in tech was business-to-business information technology firm CA Tech, which jumped 18.7 percent after chipmaker Broadcom announced a surprise $18.9 billion deal to buy the company. CA Tech was the biggest percentage gainer in the S&P 500 while Broadcom plummeted 13.7 percent at the news after investors questioned the wisdom of its decision.
The technology index rose 1.8 percent, yesterday’s best-performing sector, and is now leading year-to-date gains among sectors. The S&P industrials index rose 1.1 percent while healthcare also gained some 1.1 percent.
The perception tech companies may be more immune to the problems being created by Trump’s trade war seemed to be a major reason for its high flight, said Quincy Krosby, chief market strategist at Prudential Financial in New Jersey. Then, there’s the counterintuitive rumor that the row with China won’t get any worse.
“The consensus is that negotiations will resume and there will be some sort of agreement between the U.S. and China,” she said. “It could be naive, but that seems to be an emerging consensus within the market.”
The United States on Tuesday threatened to impose taxes on an additional $200 billion in Chinese exports starting September. “As a result of China’s retaliation and failure to change its practices, the president has ordered USTR to begin the process of imposing tariffs of 10 percent on an additional $200 billion of Chinese imports,” said U.S. Trade Representative (USTR) Robert Lighthizer in announcing the proposed tariffs.
China admitted yesterday it hasn’t been in touch with Washington about restarting talks and while it does not want a trade war, it will fight if necessary.
Despite being among the hardest hit by the trade dispute because of their heavy reliance on steel and aluminum, Boeing and Caterpillar rose more than one percent each on Thursday, also boosting the Dow.
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