Global equities appreciated on Monday, Aug. 25, driven higher amid robust merger & acquisition activity and growing expectations that the European Central Bank will step up its stimulus.
S&P 500 breaches 2,000
The S&P 500 Index breached the psychologically-important 2,000 level, then pared these gains to finish the day at 1,997.92 at 4 p.m. in New York, according to Bloomberg. All 10 groups in the index appreciated during the day, with the energy, financial and health care segments enjoying the strongest performance, each rising at least 0.7 percent.
The benchmark group of stocks has risen roughly 100 points in the last 2.5 weeks, finishing higher in 9 of the last 12 sessions after hitting a recent low on Aug. 7, the media outlet reported. This climb has added more than $900 billion in equity to U.S. companies, eliminating the 3.9 percent drop the S&P suffered before hitting its recent valley.
The Dow Jones Industrial Average, which contains 30 stocks, also moved higher, rising 0.4 percent to 17,076.87, according to Reuters. The tech-heavy Nasdaq Composite appreciated, increasing 0.41 percent to reach 4,557.35.
Robust M&A drives gains
Strong M&A activity helped drive the gains in the major U.S. stock indices, as Burger King’s shares surged 20 percent after the fast food company announced that it is in discussions to potentially buy restaurant chain Tim Hortons, Bloomberg reported. In addition, Roche bought biotechnology company InterMune for $8.3 billion, sending the company’s securities up 35 percent.
Joe Bell, senior equity analyst at Cincinnati-based Schaeffer’s Investment Research, emphasized that the S&P’s first climb above 2,000 is substantial. In addition, he noted that the benchmark group of stocks may have grown inflated, and might experience a pause for the time being, according to the news source.
Key role of next milestone
Now that the S&P 500 has risen above 2,000, Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, noted the importance of the next milestone, which involves the benchmark group of stocks closing above that level, CNBC reported.
“It’s important that we made it; it’s a milestone, but more importantly is it’s a good time to review where you’ve been and where you’re going; that’s the true take away for the individual, as institutions should be doing it anyway,” Silverblatt told the news source.
ECB president’s comments provoke speculation
In European markets, the Stoxx Europe 600 Index rose 1.1 percent during the day after Mario Draghi, president of the ECB stated during the previous session that the financial institution’s officials “stand ready to adjust our policy stance further” and will harness all available tools to “ensure price stability over the medium term,” the media outlet reported.
These statements, made at the Federal Reserve’s annual meeting in Jackson Hole, Wyoming, helped spur speculation that the euro zone’s central bank was readying a bond-buying program to provide upward pressure on prices, according to Reuters.
The remarks signaled a coming change in policy from focusing on austerity to stimulating economic growth, the media outlet reported. Phil Orlando, chief equity market strategist at Federated Investors in New York, spoke to the impact of Draghi’s comments.
“European investors came in today with the mindset that we’re going to have a more supportive fiscal and monetary policy stimulus, and therefore we ought to see better times ahead in terms of economic growth and corporate earnings,” Orlando told the news source. “Europe is essentially driving the U.S.”
Stock market predictions
After the recent successes, with a key one being the S&P’s rise above 2,000, various market experts weighed in with their predictions for equities. “I continue to think this bull market has several years to go,” Steven Einhorn, vice chairman of hedge fund Omega, told Reuters.
David Joy, chief market strategist at Ameriprise Financial in Boston, provided a different point of view, according to the news source.
“I’m a little worried about where equities are in the short run, between Labor Day and the end of the year, since I expect some kind of adjustment as QE winds down,” he told the media outlet. “I’m not feeling too enthusiastic about stocks. I don’t see a lot that’s cheap. I’m more of a seller than a buyer.”
Joy is not the only one worried about how winding down Fed stimulus will impact equity markets, as many market experts warned previously that tapering bond purchases would provide tailwinds for stocks.
After maintaining a monthly regimen of $85 billion in bond purchases between late 2012 and the end of 2013, the central bank started lowering these transactions at the beginning of 2014. Most recently, the financial institution has been buying $25 billion in securities per month. Now, market participants have largely turned their sights to the statements of Fed officials to figure out when the financial institution will increase benchmark interest rates.
Investors who trade stocks online could benefit from knowing about the rally that stock indices enjoyed on Aug. 25. In addition, they might want to know about the developments that surrounded this appreciation.
Global equities appreciated on Monday, Aug. 25, driven higher amid robust merger & acquisition activity and growing expectations that the European Central Bank will step up its stimulus.
S&P 500 breaches 2,000
The S&P 500 Index breached the psychologically-important 2,000 level, then pared these gains to finish the day at 1,997.92 at 4 p.m. in New York, according to Bloomberg. All 10 groups in the index appreciated during the day, with the energy, financial and health care segments enjoying the strongest performance, each rising at least 0.7 percent.
The benchmark group of stocks has risen roughly 100 points in the last 2.5 weeks, finishing higher in 9 of the last 12 sessions after hitting a recent low on Aug. 7, the media outlet reported. This climb has added more than $900 billion in equity to U.S. companies, eliminating the 3.9 percent drop the S&P suffered before hitting its recent valley.
The Dow Jones Industrial Average, which contains 30 stocks, also moved higher, rising 0.4 percent to 17,076.87, according to Reuters. The tech-heavy Nasdaq Composite appreciated, increasing 0.41 percent to reach 4,557.35.
Robust M&A drives gains
Strong M&A activity helped drive the gains in the major U.S. stock indices, as Burger King’s shares surged 20 percent after the fast food company announced that it is in discussions to potentially buy restaurant chain Tim Hortons, Bloomberg reported. In addition, Roche bought biotechnology company InterMune for $8.3 billion, sending the company’s securities up 35 percent.
Joe Bell, senior equity analyst at Cincinnati-based Schaeffer’s Investment Research, emphasized that the S&P’s first climb above 2,000 is substantial. In addition, he noted that the benchmark group of stocks may have grown inflated, and might experience a pause for the time being, according to the news source.
Key role of next milestone
Now that the S&P 500 has risen above 2,000, Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, noted the importance of the next milestone, which involves the benchmark group of stocks closing above that level, CNBC reported.
“It’s important that we made it; it’s a milestone, but more importantly is it’s a good time to review where you’ve been and where you’re going; that’s the true take away for the individual, as institutions should be doing it anyway,” Silverblatt told the news source.
ECB president’s comments provoke speculation
In European markets, the Stoxx Europe 600 Index rose 1.1 percent during the day after Mario Draghi, president of the ECB stated during the previous session that the financial institution’s officials “stand ready to adjust our policy stance further” and will harness all available tools to “ensure price stability over the medium term,” the media outlet reported.
These statements, made at the Federal Reserve’s annual meeting in Jackson Hole, Wyoming, helped spur speculation that the euro zone’s central bank was readying a bond-buying program to provide upward pressure on prices, according to Reuters.
The remarks signaled a coming change in policy from focusing on austerity to stimulating economic growth, the media outlet reported. Phil Orlando, chief equity market strategist at Federated Investors in New York, spoke to the impact of Draghi’s comments.
“European investors came in today with the mindset that we’re going to have a more supportive fiscal and monetary policy stimulus, and therefore we ought to see better times ahead in terms of economic growth and corporate earnings,” Orlando told the news source. “Europe is essentially driving the U.S.”
Stock market predictions
After the recent successes, with a key one being the S&P’s rise above 2,000, various market experts weighed in with their predictions for equities. “I continue to think this bull market has several years to go,” Steven Einhorn, vice chairman of hedge fund Omega, told Reuters.
David Joy, chief market strategist at Ameriprise Financial in Boston, provided a different point of view, according to the news source.
“I’m a little worried about where equities are in the short run, between Labor Day and the end of the year, since I expect some kind of adjustment as QE winds down,” he told the media outlet. “I’m not feeling too enthusiastic about stocks. I don’t see a lot that’s cheap. I’m more of a seller than a buyer.”
Joy is not the only one worried about how winding down Fed stimulus will impact equity markets, as many market experts warned previously that tapering bond purchases would provide tailwinds for stocks.
After maintaining a monthly regimen of $85 billion in bond purchases between late 2012 and the end of 2013, the central bank started lowering these transactions at the beginning of 2014. Most recently, the financial institution has been buying $25 billion in securities per month. Now, market participants have largely turned their sights to the statements of Fed officials to figure out when the financial institution will increase benchmark interest rates.
Investors who trade stocks online could benefit from knowing about the rally that stock indices enjoyed on Aug. 25. In addition, they might want to know about the developments that surrounded this appreciation.
The post Global Stocks Move Higher amid ECB Speculation & Robust M&A Activity appeared first on | HY Markets Official blog.
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