Wall Street’s key index, the S&P 500 closed at a record high on Tuesday, completing a rebound from the huge losses of February and March triggered by the coronavirus pandemic and fears of a deep recession.
Tuesday’s rise in the index was small – just 7.7 points as it edged up 0.23% to 3,389.78.
Analysts pointed to weak results from Walmart and Home Depot which clipped the index’s gains for the day.
ASX futures traders weren’t as excited and the overnight ASX 24 platform was showing a weak to flat start at 7 am this morning for the local market.
Since hitting the pandemic low on March 23 the index has surged about 55%. Reuters said that gain is the largest in the shortest period of time – 103 days.
Trillions of dollars in fiscal and monetary stimulus have pushed commodities, shares, bonds higher and millions of investors, stuck at home in lockdowns have entered the market as day traders.
But there has been another major factor many analysts have ignored – the weakness in the value of the US dollar which touched a 27 month low on the US Dollar Index, a measure of the greenback’s value against a basket of major currencies.
The dollar hit two lows against the euro and the Japanese yen. The Australian dollar trade around 72.44 Wednesday morning in Asia, the highest in 20months (since January 2019).
That has been helping drive commodity prices higher – led by gold and silver.
The slide in the US dollar saw Comex gold top $US2,000 an ounce for the second time in a month. It rose $US14.40 or 0.7% to settle at $US2,012.10 an ounce, after the metal climbed 2.5% on Monday .
Oil though dipped a fraction to $US42.51 a barrel.
Apple, Netflix, Amazon, Facebook, Microsoft, and other high growth technology-related stocks have become the dominating stocks on Wall Street, replacing the so-called blue-chip banks and other industrials.
That rotation has seen the tech-heavy Nasdaq surge to a series of record highs in the past month.
On Tuesday it rose 81 points to end at 11,210.84, up 81.12 points and a new high, its 18th since early June.
Tuesday’s record was its 34th record close so far this year compared with 31 record closing highs in 2019 and 29 in 2018.
The Dow has lagged the other two measures lately. It fell 66.84 points, or 0.24%, to 27,778.07.
Both Walmart and Home Depot recorded their strongest quarterly sales gains ever but analysts pointed out this could be as good as it gets and the outlook for more of the same was dismissed.
