17 January 2021

Hello August: Dow and S&P Reach New Highs

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Both the Dow and the S&P 500 rose to record highs Thursday, with both up around 1%. The S&P 500 climbed more than 1% to over 1,700 and the Dow jumped to over 15,600. The Nasdaq is at its highest level in nearly 13 years.

A confluence of positive economic data, strong earnings reports, and indications that the Fed will continue the bond-buying program helped to drive the markets to new highs.

Economic Indicators 

The market gains were driven by positive economic news from the Department of Labor. First-time claims for unemployment benefits fell to its lowest point in five years. The DOL job report will be released Friday and many economists expect 180,000 jobs will have been added in July.

The Census Bureau reported construction spending was down in June, contrary to expectations of growth.

The monthly manufacturing sentiment index jumped to 55.4, its highest level in two years.

Automakers released monthly sales figures Thursday, with most reporting strong sales. Domestic automakers Ford, General Motors, and Chrysler all reported their best July sales figures since before 2007. Toyota also reported its best sales since before the recession.

Earnings Reports 

Exxon Mobil (XOM) and Royak Dutch Shell (RDSA) both reported quarterly earnings that fell short of estimates.

Procter & Gamble (PG) reported earnings and sales that beat forecasts in its fiscal fourth quarter.

DirecTV (DTV) reported earnings that fell short of forecasts pulling the stock down.

Sony (SNE) reported a 13 percent jump in sales versus first quarter last year, with smartphone sales a heavy factor in the growth. A weaker Yen also contributed to the revenue boost.

J C Penney (JCP) reversed its drop yesterday after releasing a statement disputing reports that CIT Group, Inc. (CIT) had cut credit to some of its suppliers over repayment concerns.

Yelp (YELP) shares jumped over 25% after reporting smaller-than-expected quarterly losses late Wednesday.

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