Business

US stocks ring in 2018 with gains as technology leads again

Wednesday, January 03, 2018

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NEW YORK, United States (AP) — Technology and health care companies jumped yesterday as US stocks started the new year the same way they spent the last one: rising steadily and setting records. Energy companies, which struggled in 2017, also climbed.

Asian markets rose after surveys in China and India showed continued manufacturing growth in the world's most populous countries. US stocks followed suit as investors snapped up shares of companies that should benefit from faster economic growth, including technology, health care and materials companies, just as they did last year. The Nasdaq composite busted through another milestone as it closed above 7,000 points.

“We'll continue to see many of the themes from last year play out,” said Kate Warne, an investment strategist for Edward Jones.

She said the global economy should keep growing and businesses and consumers around the world will continue to spend more money. It helps that interest rates are low, and governments in areas that reduced their spending during the Great Recession are becoming more willing to spend.

The Standard & Poor's 500 index rose 22.20 points, or 0.8 per cent, to a record 2,695.81. The Dow Jones industrial average climbed 104.79 points, or 0.4 per cent, to 24,824.01. The Nasdaq composite jumped 103.51 points, or 1.5 per cent, to 7,006.90. The Russell 2000 index, which consists of smaller company stocks, gained 14.50 points, or 0.9 per cent, to 1,550.51, also a new high.

The Nasdaq had its best opening day since 2013 as the big technology companies that dominated in 2017 got the new year off to a good start. Facebook rose US$4.96, or 2.8 per cent, to US$181.42 and Apple climbed US$3.03, or 1.8 per cent, to US$172.26. Chipmaker Nvidia climbed US$5.85, or 3 per cent, to US$199.35.

Drug and medical device companies led the health care sector higher. Hepatitis C and HIV drug maker Gilead Sciences gained US$2.46, or 3.4 per cent, to US$74.10. Abbott Laboratories, which sells medications, infant formula and medical devices, picked up US$1.72, or three per cent, to US$58.79 and Baxter International gained US$2.53, or 3.9 per cent, to US$67.17.

Retailers also rose. That included Amazon, which added US$19.54, or 1.7 per cent, to US$1,189.01. Retailers that struggled last year, including big box and department stores, also fared well. Target rose US$2.38, or 3.9 per cent, to US$67.63 while Kohl's picked up US$2.12, or 3.9 per cent, to US$56.35. Early indications suggest shoppers had a busy holiday season and investors will look for confirmation of those reports in the weeks to come.

Bond prices slid. The yield on the 10-year Treasury note rose to 2.46 per cent from 2.41 per cent. The yield on two-year note rose to 1.92 per cent from 1.89 perc ent.

The increase in bond yields sent high-dividend stocks like utilities, household goods makers and real estate companies lower. Higher bond yields make those stocks less appealing to investors seeking income.

Investors bet that the markets will stay calm, too. The VIX, a measurement of how much volatility investors expect, moved sharply lower. It's been at historic lows since April.

 

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