Wall Street ended higher with the S&P 500 and Nasdaq reaching new highs (again) on Wednesday, despite more evidence the US economy remains weak.
The solid gains came despite weakness in two of the main drivers of this year’s boom, Apple and Tesla which both ended the day lower.
The Fed’s Beige book which looks at anecdotal reports from across the country from business about the strength of activity revealed more signs of a slowing in August.
Coming ahead of the August jobs data on Friday, the comments in the Beige Book added to the underlying concerns about the economy.
That worried some investors, but they soon got over those nerves and sent most stocks higher. The Dow, S&P 500, and Nasdaq all closed with the best single-day gains for some weeks – the Dow was up 1.59%, Nasdaq was up nearly 1% and the S&P 500 jumped 1.54%.
Shares in Tesla took another dive on Wednesday to move into correction territory (a fall of 10% or more), after the electric vehicle maker revealed that one of its largest shareholders sold shares in what was a rebalancing as the value of the stake has actually increased.
What worried investors was the timing of the disclosure — a day after the company itself said it would sell up to $US5 billion in shares to raise new funds by taking advantage of the recent surge and the one for five split which has made the shares more appealable to small investors.
Tesla’s stock dropped 5.8% to $US447.37 in active trading, to mark the biggest one-day decline in about six weeks. The stock has now slumped 11.4% since it closed at a record of $US498.32 on Monday when the split happened.
Apple shares shed 2.07% to $US131.40 on Wednesday, in a positive session for Wall Street. The Dow was up 1.6% or 456 points to 29,100.50; the Nasdaq rose almost 1% rising to 12,056.44 and the S&P 500 was up 1.54% to 3,580.54.
Wednesday’s fall snapped a two-day winning streak. Apple shares closed $US3.40 short of its 52-week high ($US134.80), which the company hit on Tuesday -September 1st – in the wake of the four for one split before trading started on Monday.
That’s despite a rise in the value of the US dollar and a small dip in US 10 year bond yields in the wake of the Fed’s report.
The ASX will open more than 35 points higher, according to the overnight futures market while the Aussie dollar traded over 73 US cents this morning. The expected gain for the ASX comes after the solid rise on Wednesday with a gain of more than 109 points or 1.8%.
Oil and gold fell sharply in the wake of the rise in the value of the greenback.
Comex December gold futures fell $US34.20, or 1.7%, to settle at $US1,944.70 an ounce, while December silver shed $US1.25, or 4.4%, to settle at $US27.395 an ounce, Comex December copper settled at $US3.0205 a pound, down 0.3%
US oil futures fell to a month low. In New York, West Texas Intermediate crude for October delivery fell $US1.25, or 2.9%, to settle at $US41.51 a barrel while in Europe November Brent crude, lost $US1.15, or 2.5%, to end at $US44.43 a barrel.
Iron ore prices rose despite the stronger dollar – the price of 62% Fe fines delivered to northern China was up around 2% to $US127.31 a tonne.
