Thursday January 2nd


Dow jumps 200 points, hits record as Wall Street’s monster 2019 rally extends into the new year

Stocks rose to all-time highs on Thursday as the strong rally in 2019 was set to continue in the first trading day of the new year. The Dow Jones Industrial Average advanced 200 points, or 0.7%. The S&P 500 traded 0.6% higher while the Nasdaq Composite gained 0.9%. Intel shares climbed 1.5% to lead the Dow higher. The energy and tech sectors both gained more than 0.8% to lift the S&P 500. Western Digital was the best-performing stock in the S&P 500, climbing 3.9%. Tesla shares, meanwhile, traded 2.2% higher.  “We’re starting the year off on the sunny side,” said Peter Cardillo, chief market economist at Spartan Capital Securities. “Besides the geopolitical tensions, the focus remains on the macro news which has been consistent and points to growth ahead.” Thursday’s gains come after Wall Street booked a strong 2019 performance on Tuesday, with the S&P 500 rising 28.9% in the year. That was the broad index’s biggest annual gain since 2013, when it surged 29.6%. The Dow, meanwhile, climbed 22.3% while the Nasdaq Composite skyrocketed more than 35%. Sentiment was lifted Thursday after the People’s Bank of China lowered the amount of reserve cash the country’s banks need to support the economy. This move will inject about 800 billion yuan in liquidity to the Chinese economy. Chinese stocks rose broadly on the announcement, with global equity markets following them. In Europe, the German Dax rose 1% while the French CAC 40 jumped 1.3%. “Equities begin [2020] on firm ground building on the momentum from last year,” said Gregory Faranello, head of U.S. rates at AmeriVet Securities, in a note. But “it’s hard to imagine 2020 offering the same type of returns of last year.” While global stocks are off to a good start for 2020, investors will remain tracking trade developments as well as political risks. President Donald Trump said Tuesday that he will be signing a first phase trade deal with China on Jan. 15 at the White House. The president also announced that he will be going to Beijing at a later date when phase two talks begin. On the data front, weekly jobless claims came in at 222,000, slightly below a Reuters estimate of 225,000. Manufacturing data is also set for release later in the day. Tesla shares rose after an analyst at Canaccord Genuity hiked his price target on the stock to $515 per share from $375 per share, noting 2020 will be an “electric year” for the company. The Shanghai composite gained 1.15% to close at about 3,085.20 while the Shenzhen component rose 1.99% to end its trading day at 10,638.82. The Shenzhen composite also added 1.928% to close at approximately 1,756.16. Hong Kong’s Hang Seng index gained 1.16%, as of its final hour of trading. South Korea’s Kospi lagged the general upward trend regionally as it fell 1.02% to end its trading day at 2,175.17. Markets in Japan were closed on Thursday for a market holiday. Oil prices steadied after early gains on Thursday as signs of improving trade relations between the United States and China which eased demand concerns and rising tensions in the Middle East provided support. Brent crude futures rose 33 cents to $66.36 a barrel, while U.S. West Texas Intermediate crude was up 19 cents at $61.25 per barrel. Gold firmed on Thursday, edging back towards the three-month peak it reached earlier in the week on the back of dollar weakness, with the market focusing on minutes of the U.S. Federal Reserve’s December policy meeting. Spot gold was up 0.7% to $1,527.40 per ounce, having touched its highest since Sept. 25 at $1,525.20 on Tuesday. U.S. gold futures were up 0.5% at $1,530.30.