Financials sector pressures the Dow
U.S. stocks closed mostly higher on Thursday, 14 June 2018 with a rally in technology stocks driving the Nasdaq to its latest in a series of recent records. A flurry of stronger-than-expected economic data also lent support to stocks, while investors were mostly supportive about the European Central Bank detailing a timeline for its bond-buying program, as well as its interest-rate policy.
The Dow Jones Industrial Average fell 25.89 points, or 0.1%, to 25,175.31. The Nasdaq Composite Index gained 65.34 points, or 0.9%, to 7,761.04, setting an intraday record and closing at a record. The S&P 500 advanced 6.86 points, or 0.3%, to 2,782.49.
Financials pressured the index, with JPMorgan Chase & Co.falling 1.8%. Eight sectors advanced on Thursday. The lightly-weighted utilities group was the top performer, continuing to rebound after a poor start to the month, and the consumer discretionary sector was also a notable outperformer.
As expected, the European Central Bank left its key policy rate unchanged on Thursday morning and announced a plan to end its asset purchase program. The ECB in September will cut its monthly purchases in half, from EUR30 billion to EUR15 billion, and then end purchases altogether three months later -- although it will continue to reinvest the principal from maturing securities. As for interest rates, the ECB said they will remain at their present levels "at least through the summer of 2019."
The Fed on Wednesday, meanwhile, indicated that it will likely raise interest rates more aggressively in 2018 than previously signaled. Its decision came after regular trading in gold futures had ended. Higher interest rates lift the appeal of holding dollars. That also means that a stronger dollar cuts the worth of holding non-yielding gold that's priced in this denomination.
For its part, the Fed voted Wednesday to raise its benchmark federal-funds rate by a quarter-percentage point to a range of 1.75% and 2%. The central bank also said it expects to raise rates four times this year, up from a forecast of three in March. See the live blog/recap and video of the event here.
The leading dollar index, which typically moves inversely to gold, also gained, after spending the early part of the day in the red. Forex investors assessed the European Central Bank's plan to end in December its post-crisis bond-buying program, which has for years helped prop up an economic recovery that officials increasingly believe can now stand on its own.
A flurry of economic reports early Thursday, including sizzling retail sales, largely backed the Fed's stance. May retail sales rose 0.8% (consensus +0.4%), while the April increase was revised to 0.4% from 0.3%. Excluding autos, retail sales increased 0.9% in May (consensus +0.5%), and the April increase was revised to 0.4% from 0.3%. The key takeaway from the report is that consumer spending on goods was strong in May, which will feed expectations for a healthy pickup in second quarter GDP growth.
The latest weekly initial jobless claims count totaled 218,000, while the consensus expected a reading of 223,000. Today's tally was below the unrevised prior week count of 222,000. As for continuing claims, they declined to 1.697 million from a revised count of 1.746 million (from 1.741 million). The key takeaway from the report is the same as last week: the low level of initial and continuing jobless claims is consistent with a tight labor market.
Bullion prices ended higher at Comex on Thursday, 14 June 2018. Gold futures gained Thursday, scoring the highest finish in a month for a most-active contract in the wake of monetary policy decisions by the European Central Bank and U.S. Federal Reserve. August gold climbed by $7, or 0.5%, to settle at $1,308.30 an ounce. July silver added 1.6% to $17.262 an ounce.
Crude oil futures logged their highest settlement in two weeks on Thursday, 14 June 2018 buoyed by a hefty weekly decline in U.S. crude supplies, though the rise was modest given a climb in last week's domestic production to a record level. The global crude benchmark, meanwhile, gave up nearly all of the gains it saw a day earlier on the possibility that the Organization of the Petroleum Exporting Countries will decide to boost output when members and other major oil producers meet next week.
July West Texas Intermediate crude rose by 25 cents, or 0.4%, to settle at $66.89 a barrel on the New York Mercantile Exchange, the highest finish since May 31. Prices for the U.S. benchmark notched a fourth consecutive session of gains.
Looking ahead, investors will receive on Friday morning the Industrial Production and Capacity Utilization report for May, the Empire Manufacturing report for June, and the preliminary reading of the University of Michigan Consumer Sentiment Index for June. Also, the Bank of Japan will release its latest policy directive overnight. No changes are expected.
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