News Column

MARKET COMMENT: US Stocks Set To Extend Gains

May 28, 2014

James Kemp

LONDON (Alliance News) - US stocks are set to open marginally higher Wednesday, extending their recent gains, with the S&P 500 index set to record another all-time high.

US equities closed firmly higher Tuesday, posting their fourth consecutive daily increase, buoyed in part by an unexpected rise in durable goods orders in April.

The Commerce Department reported that durable goods orders increased by 0.8% after surging by an upwardly revised 3.6% in March. This came as a surprise to economists, who had expected orders to drop by 0.5% compared with the 2.9% jump that had been reported for the previous month.

A separate report showed that US consumer confidence improved in line with economists' estimates in May, while housing data and the preliminary reading of the Markit services purchasing managers index beat economists' expectations.

The DJIA ended up 0.4% at 16,675.5, the NASDAQ Composite closed up 1.2% at 4,237.068, and the S&P 500 closed up 0.6% at 1,911.91, having hit a record high of 1,912.28 earlier in the session.

With the S&P 500 closing fractionally below its all-time high, and the DJIA just 60 points off its all-time high, Wednesday looks set to be another record breaking session on Wall Street.

Ahead of the New York bell, the DJIA, S&P 500, and NASDAQ Composite are all called to open up around 0.2%.

However, "a day bereft of macro data means we are unlikely to see much progress, even if durable goods orders are still having an impact," says Brenda Kelly, chief market strategist at IG.

"Traders will be positioning themselves ahead of the preliminary US GDP release tomorrow," says Jasper Lawler, a market analyst at CMC Markets.

In corporate news, Valeant Pharmaceuticals Inc is in focus Wednesday after it sold its skin care rights to Swiss foods giant Nestle SA in a USD1.4 billion deal, and raised its offer for botox maker Allergan Inc.

It increased the cash part of its Allergan offer by USD10.00 per share to USD58.30 per share, keeping the shares part of the deal at 0.83 Valeant shares for each Allergan share.

In the UK, prior to the US equity market open, the FTSE 100 is up 0.1% at 6,854.31, the FTSE 250 is up 0.4% at 15,904.43, while the AIM All-Share index is almost perfectly flat at 806.43.

In Europe, the CAC 40 in Paris and DAX 30 in Frankfurt are both up 0.1%.

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Source: Alliance News

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