Dow stays above 23,000-mark on IBM surge

FAN Editor
Traders work on the floor of the NYSE in New York
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., October 13, 2017. REUTERS/Brendan McDermid

October 18, 2017

By Sruthi Shankar

(Reuters) – The Dow Jones Industrial Average rallied above the 23,000-mark on Wednesday, propelled by IBM’s 9 percent surge after the computing giant hinted a return to revenue growth.

IBM shares <IBM.N> were on course to record their biggest percentage gain in more than eight years and accounted for nearly 95 points of the 148 point-gain for the blue-chip index.

The Dow had briefly surpassed the all-time peak on Tuesday but closed 3 points short of it. The latest 1,000-point increase was covered in roughly half the time it took the index to move from 21,000 to 22,000.

Solid earnings, stable economic growth and hopes that President Donald Trump may be able to make progress on tax cuts have helped the market rally this year.

“We continue to see solid numbers above expectations, stability in terms of economic growth and global growth,” said Omar Aguilar, chief investment officer for equities at Charles Schwab Investment Management.

“Announcements by the ECB next week and decision by the Fed in December will probably have a higher impact on whether or not we continue this rally.”

The dollar climbed higher, tracking higher U.S. Treasury yields, while news on a potential new hawkish Federal Reserve chair and the slow progress of U.S. tax reforms also supported the greenback. [USD/]

Investors are also awaiting the Fed’s issue of the Beige Book, a periodic snapshot on the health of the U.S. economy. The report, due at 2:00 p.m. ET, will likely show if inflation pressures are accelerating.

At 12:39 a.m. ET, the Dow Jones Industrial Average <.DJI> was up 147.24 points, or 0.64 percent, at 23,144.68, the S&P 500 <.SPX> was up 3.07 points, or 0.12 percent, at 2,562.43 and the Nasdaq Composite <.IXIC> was up 8.21 points, or 0.12 percent, at 6,631.87.

The S&P and the tech-heavy Nasdaq also hit record highs on Wednesday but traded in narrow ranges. Six of the 11 major S&P sectors were lower, led by 1.32 percent drop in the telecom services index <.SPLRCL>.

Energy stocks <.SPNY> also took a beating, led by a 1.7 percent decline in Chevron <CVX.N>.

The financial index <.SPSY> jumped 0.65 percent, led by bank stocks, which gained from a surge in treasury yields and bullish calls by brokerages.

Shares of Wells Fargo <WFC.N>, Bank of America <BAC.N> and Goldman Sachs <GS.N> rose between 1.2 percent and 2.2 percent.

Abbott <ABT.N> rose 1.90 percent after the company’s profit beat estimates on strong sales in its medical devices business.

Anthem <ANTM.N> gained more than 3 percent after the health insurer said it signed an agreement with CVS Health <CVS.N> to support the company’s new pharmacy benefit management business.

Chipotle Mexican Grill <CMG.N> slipped 2.7 percent after Bank of America Merrill downgraded the company’s stock to “underperform” and slashed its price target by $105 to $285.

Advancing issues outnumbered decliners on the NYSE by 1,434 to 1,358. On the Nasdaq, 1,699 issues rose and 1,115 fell.

(Reporting by Sruthi Shankar in Bengaluru; editing by Saumyadeb Chakrabarty and Arun Koyyur)

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