While you were sleeping: Dow climbs above 26,000 points

Wednesday 17th January 2018

Wall Street moved higher, paring some of its gains after touching record highs earlier in the day, amid better-than-expected corporate earnings including from UnitedHealth Group and a rally in Merck shares.

In 1.25pm trading in New York, the Dow Jones Industrial Average rose 0.4 percent, while the Nasdaq Composite Index eked out a 0.02 percent gain. In 1.10pm trading, the Standard & Poor’s 500 Index added 0.1 percent.

Earlier in the day Wall Street's three benchmark indexes each touched record highs.

The Dow vaulted past 26,000 points, led by gains in shares of Merck and those of UnitedHealth Group, recently up 6.9 percent and 2.4 percent respectively.

“This is going to be a philosophical question within the market, in terms of how much higher earnings growth from tax cuts is worth in terms of valuation, and how much is it worth just purely on a dollar per share earnings basis,” Jurrien Timmer, director of global macro at Fidelity Investments, told Bloomberg. “I think that the market’s trying to figure that out, and on top of that you have the classic momentum story.”

On Monday US financial markets were closed for Martin Luther King Jr Day.

Shares of Merck jumped on results of a key trial for its Keytruda cancer drug.

In Europe, the Stoxx 600 Index ended the day with a 0.1 percent advance from the previous close. France’s CAC40 Index gained 0.1 percent, while Germany’s DAX Index increased 0.4 percent. However, the UK’s FTSE 100 index fell 0.2 percent.

Shares of Switzerland’s Lindt & Spruengli dropped after the chocolate maker posted sales growth that failed to meet expectations, fuelling concern about the outlook.

The company’s organic sales rose 3.7 percent in 2017, which was “below the range of the long-term strategic growth target due to the modest growth of the US companies,” it said in a statement. Excluding Russell Stover, Lindt posted a 5.9 percent increase in organic sales last year, it said.

"Despite weaker results in the USA, Lindt & Spruengli remains on track in the world's largest chocolate market and during the last financial year set the foundation for further profitable growth," the company said in the statement.

The company said it confirms its mid- to long-term strategic sales growth target of 6 percent to 8 percent.

"Given the deteriorating trend ... we believe more investors might start to question the achievability of that target going forward," Helvea analyst Andreas von Arx told Reuters. "Whereas Nestle and Unilever execute in portfolio-improving deals, Lindt's key step has been the expensive, non-delivering Russell Stover acquisition."

Lindt's most actively traded shares closed 3.3 percent weaker in Zurich.

Meanwhile, rival Nestle agreed to sell its US confectionery unit to Ferrero, the Italian maker of Nutella. Nestle said in a statement announcing the sale that it remains “fully committed” to its chocolate business around the world, Bloomberg reported.

Nestle shares closed 0.3 percent weaker in Zurich.

(BusinessDesk)

Comments from our readers

No comments yet