VOL. 133 | NO. 124 | Thursday, June 21, 2018
US stocks rise as trade fears ebb and tech companies lead
The Associated Press
NEW YORK (AP) — U.S. stocks are rising Wednesday, led by technology and media companies, as global markets let go of some of their fears about the growing trade dispute between the U.S. and China. Still, investors are favoring the companies they think are less vulnerable to tariffs. Twenty-First Century Fox is jumping after Disney agreed to buy Fox's entertainment businesses for more than $71.3 billion, topping an offer from Comcast. Investors are hoping that will be followed by other deals.
KEEPING SCORE: The S&P 500 index rose 6 points, or 0.2 percent, to 2,769 as of 2:45 p.m. Eastern time. The Dow Jones industrial average slipped 30 points, or 0.1 percent, to 24,665. It's fallen for each of the last six days as the trade turbulence hurt industrial and materials companies, which do a lot of businesses outside the U.S. The Nasdaq composite gained 68 points, or 0.9 percent, to 7,793, which put it on track for a record high. The Russell 2000 index of smaller-company stocks added 13 points, or 0.8 percent, to 1,706 after it closed at another record high Tuesday.
Markets have been on edge with the U.S. and China announcing tariffs on each other's imports and threatening more. While global stocks fell Tuesday, the S&P 500 finished with a loss of just 0.4 percent as investors decided that many U.S. industries don't face a major threat from the proposals and that smaller, more domestically-focused companies are likely to keep doing well.
Both countries plan to put tariffs on about $50 billion in imports in early July, which still leaves them with several weeks to negotiate.
SEQUEL: Twenty-First Century Fox jumped again after it accepted a new offer from Disney that values Fox's entertainment and international businesses at more than $70 billion in cash and stock. Fox accepted a $52.4 billion bid from Disney in December before Comcast offered $65 billion in cash, and some experts think Comcast will raise its offer again. Fox surged 7.8 percent to $48.22 while Disney added .08 0.8 percent to $106.96. Comcast climbed 2.1 percent to $33.51.
Other media companies rose as well. Netflix jumped 3.5 percent to $419.17 and Viacom added 3.1 percent to $30.22.
THE QUOTE: Sameer Samana, global equity and technical strategist for the Wells Fargo Investment Institute, said investors aren't sure what to make of the administration's mix of harsh pronouncements and conciliatory statements. While the market has taken some sharp drops during the trade dispute, he said Wall Street usually comes back to the fact that the global economy, and especially the U.S. economy, is doing well.
"For the most point things are pretty good from an economic and fundamental standpoint," he said. Samana added that technology companies have often led the way when the market recovers from trade-related slumps because China's government is trying to build up its own technology sector, so it can't put too many tariffs on U.S. technology companies.
DOW AND OUT: General Electric is coming out of the Dow Jones industrial average after more than a century and it will be replaced by Walgreens Boots Alliance on Tuesday. GE was part of the Dow when the index was created 1896, but for years it's been struggling in critical markets and selling off businesses. After a 50 percent drop in the last year it's by far the least expensive Dow stock. Early this year said the Securities and Exchange Commission was investigating the company over a $15 billion hit taken to cover miscalculations made within an insurance unit. Adjusted for inflation, GE was worth around $860 billion in mid-2000, but it's worth about $112 billion now.
GE slipped 0.8 percent to $12.85 and Walgreens jumped 5.1 percent to $67.92.
BITTER TASTE: Starbucks sank 9.4 percent to $52.06 after a weak sales forecast. Starbucks said it didn't do as many transactions in China as it expected, and the controversy that followed the arrest of two black men at a Philadelphia store temporarily slowed its U.S. business.
ENERGY: Oil futures climbed ahead of Friday's OPEC meeting, where most experts think the group will increase production. As a result of that view, crude prices have dropped over the last few weeks. Benchmark U.S. crude rose 1.8 percent to $66.22 a barrel in New York. Brent crude, the international standard for oil prices, lost 0.5 percent to $74.74 a barrel in London.
Wholesale gasoline lost 0.7 percent to $2.02 a gallon. Heating oil fell 0.7 percent to $2.11 a gallon. Natural gas jumped 2.2 percent to $2.96 per 1,000 cubic feet.
BONDS: Bond prices inched lower. The yield on the 10-year Treasury note rose to 2.92 percent from 2.90 percent.
METALS: Gold fell 0.3 percent to $1,274.50 an ounce. Silver lost 0.1 percent to $16.31 an ounce. Copper dipped 0.2 percent to $3.04 a pound.
CURRENCIES: The dollar edged up to 110.22 yen from 110.07 yen. The euro rose to $1.1588 from $1.1575.
OVERSEAS: The FTSE 100 in Britain added 0.3 percent and Germany's DAX rose 0.1 percent. France's CAC 40 lost 0.3 percent. After sharp losses the day before, Japan's benchmark Nikkei 225 index rebounded 1.2 percent and South Korea's Kospi gained 1 percent. Hong Kong's Hang Seng rose 0.8 percent.
AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP His work can be found at https://apnews.com/search/marley%20jay
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