Market Update: U.S. Stocks Forge Ahead as S&P 500 Eyes Record High
U.S. stocks extended their earnings-inspired rally on Tuesday, with the S&P 500 Index inching toward its first record high in over six months.
Stocks Continue Higher
The large-cap S&P 500 Index rose 0.3% to 2,858.45, its fifth gain of the past six days. Seven of 11 primary sectors led by energy and financials contributed to the rally. The Dow Jones Industrial Average climbed 156.86 points, or 0.5%, to 25,629.04, its highest since Feb. 1. Meanwhile, the technology-driven Nasdaq Composite Index finished 0.3% higher at 7,883.66.
A measure of 30-day volatility known as the CBOE VIX fell to more than six-month lows, underscoring calm trading conditions on Wall Street. The so-called “fear index” fell 2.7% to 10.97 on a scale of 1-100 where 20 represents the historic average. VIX came within half a point of single digits levels not seen since the beginning of the year.
A strong earnings quarter has propelled stocks forward in recent weeks, with the benchmark indexes gaining between 2.6% and 4.9% over the past month.
S&P 500 companies are on track for an annual blended earnings growth rate of 24% in the second quarter, according to FactSet.
Trade War in Focus
Earnings euphoria has taken the focus away from an escalating trade dispute between the United States and China. Over the weekend, U.S. President Donald Trump said his country was winning the trade war and that tariffs would help Washington lower its national debt.
The Trump administration is said to be preparing a list of Chinese imports worth $200 billion that will be subject to 25% tariffs. Beijing, meanwhile, has announced retaliatory tariffs on $60 billion in U.S. goods.
Washington’s protectionist pivot is already hurting its allies in the European Union. On Monday, Germany reported a massive 4% decline in factory orders in June. Germany is Europe’s biggest economy and largest exporter.
Bitcoin Stabilizes Above $7,000
Bitcoin clawed back above $7,000 Tuesday, with the technical charts showing a strong likelihood for further short-term gains. The leading digital currency rose 2.3% to $7,119 on total trade volumes of $4.3 billion, according to CoinMarketCap.
The broader cryptocurrency market put up tepid gains, with total coin values reaching a high of $259 billion. However, the market would later reverse course to settle around $251 billion.
Bitcoin’s share of the total market hovers just below 48%, the highest since December. Its share of the total market has steadily increased over the past three months, possibly pulling traders away from more speculative altcoin and token investments.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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