The Nasdaq notched up a record high on Thursday following a surge in biotech stocks. Meanwhile, benchmarks ended in the positive territory for the fifth consecutive month. A clutch of positive economic reports also boosted investor sentiment. Moreover, speaking on CNBC, U.S. Secretary of the State, Steven Mnuchin said the Trump administration has presented a detailed tax plan to the Congress which they expect to sign into law by the year end.
The Dow Jones Industrial Average (DJIA) closed at 21,952.35, gaining 0.3%. The S&P 500 Index (INX) increased 0.6% to close at 2,471.64. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 6,428.66, increasing 1%. A total of 6.2 billion shares were traded on Thursday, higher than the last 20-session average of 5.8 billion shares. Advancing issues outnumbered decliners on the NYSE by 2.79-to-1 ratio.
Nasdaq Hits Record High as Biotech Stocks Surge
Nasdaq closed at a record high on Thursday even as biotech stocks continued to rally for the second straight day. The tech heavy index last registered a record close on Jul 26. The Nasdaq gained 63.05 during this session, increasing over 1% last month. The iShares Nasdaq Biotechnology ETF (IBB) surged 2.8% increasing 4.5% over the month.
Analysts commented that the rally in biotech stocks for the second consecutive day has boosted gains for the markets. This comes at a time when upward momentum exists despite sluggish volumes.. Consequently, Nasdaq has increased 19% year to date.
Strong Economic Reports Propel Gains for the Market
Strong economic data ensured gains for the broad based markets on Thursday. Initial jobless claims increased by 1000 to 236,000 from the previous week. However, the figure fell marginally short of the consensus estimate of 237,000. The four-week moving average of new claims stood at 236,750, a decrease of 1,250 from the previous week’s revised average. This reading indicates that the economy has stabilized. Further, it is the second lowest level recorded since the middle of 2009.,
Consumer spending improved by 0.3% for July as a result of higher incomes and low inflation rates. However, the figure fell short of the consensus estimate of a 0.4% increase. Core PCE inflation increased 0.1% for July, consistent with rate of June. Economic data released on Thursday was mostly at par with the estimates. This boosted the investor sentiment and the overall markets gained. Only pending home sales decreased 0.8% for the last month.
Trump Administration Presents Detailed Tax Plan to Congress
Steven Mnuchin, United States Secretary of the Treasury, announced on Thursday to CNBC that Trump Administration had laid down a detailed tax plan. Mnuchin also said that the plan has been presented to the Congress and White House expects to push through the policy by the year end. The administration would also release a blueprint to the public by the end of September.
The Trump Administration expects the Congress to approve the tax plan which would then be signed into law by the President. In a speech in Springfield on Wednesday, President Trump expressed the desire to reduce the corporate tax rate to 15% but said that a detailed tax plan was yet to be framed.
For the month, the Nasdaq, S&P 500 and the Dow increased 1.3%, 0.1% and 0.3% respectively. Benchmarks ended in the green for the fifth straight month, with the Nasdaq gaining during nine of the past ten months. The blue-chip index briefly touched the psychological 22,000 milestone during the month. This was possible due to strong earnings from companies like Goldman Sachs (GS - Free Report) , JP Morgan (JPM - Free Report) , 3M (MMM - Free Report) , Boeing (BA - Free Report) and Apple (AAPL - Free Report) . Boeing has added about 300 points to the blue chip index since February and helped it cross the psychological milestone.
Meanwhile, geopolitical tensions between North Korea and U.S. heightened when the former threatened to attack the Guam naval and air base. President Trump responded to such statements by stating that any attacks by North Korea would be met with ’fire and fury’. Further, North Korea also tested a missile over Japan which again raised tensions between Pyongyang and Washington.
Political instability also reduced market gains. Trump disbanded two advisory panels following a backlash from top CEOs in the country following his comments on the Charlottesville incident. Further, Trump also threatened to shut down the government if he did not receive funding for his proposed physical wall along the US-Mexico border. The much awaited Jackson Hole Symposium also failed to throw light on the future of monetary policies in the U.S. The fallout of Hurricane Harvey disrupted the oil industry in Houston, which houses 16% of the total refining capacity of U.S.
Stocks That Made Headlines
T-Mobile US Gears Up for 5G With 600-MHz LTE Sites
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Lululemon Ups View on Q2 Earnings Beat, Shares Gain 6%
Amid a struggling athletic wear market, Lululemon Athletica Inc. (LULU - Free Report) surprised investors with robust second-quarter fiscal 2017 results. (Read More)
C.H. Robinson to Grow Globally with Milgram Buyout for $50M
In a bid to expand its footprint across the globe, C.H. Robinson Worldwide, Inc. (CHRW - Free Report) acquired Milgram & Company Ltd. (Read More)
Expedia Appoints Mark Okerstrom as Chief Executive Officer
Expedia Inc. (EXPE - Free Report) has announced changes at its management level. (Read More)
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