The S&P 500 hit a new all-time closing high ahead of the long weekend as the Dow moved back above 18,000 and the Nasdaq marched ever-closer to the 5,000 level it hasn’t topped since the height of the tech bubble in the spring of 2000.
First, the scoreboard:
- Dow: 18,016.5, +44,1 (+0.2%)
- S&P 500: 2,096.9, +8.5, (+0.4%)
- Nasdaq: 4,893.4, +35.8, (+0.7%)
And now, the top stories on Friday:
1. New all-time highs for the S&P 500. On Friday, the S&P 500 made its first all-time high of the year after hitting all-time closing highs more than 40 times during 2014. In a note to clients on Friday, FundStrat’s Tom Lee wrote that over the past few weeks, investor outlooks have grown increasingly divided. “The ‘half-empty’ viewed markets as vulnerable to a ‘tail event’ from Europe (Grexit, deflation), Japan (deflation) or China, despite good US fundamental and the ‘half-full’ who saw primacy in strong US fundamentals (we are the latter). In the past few weeks, the ‘scary things’ such as sliding oil, surging dollar, plunging interest rates have all stabilised and have provided enough incremental visibility for the markets to find its footing.”
2. The latest rig count from oil driller Baker Hughes showed that the number of oil rigs in the US continued to tumble, falling by 83 last week to 1,056. This is the lowest level since August 2011. Combining oil and gas rigs, the number of rigs fell by 98 last week to the lowest level since February 2010. The number of oil rigs is now down by about 35% from its most recent peak, and Baker Hughes said on its most recent earnings conference call that during past downturns, the number of rigs in use has fallen by between 40%-60%.
3. The decline in oil prices has seen a number of oil and gas firms lay off staff. But Phillips 66, which is more widely involved in the refining and transportation of petroleum products, has benefitted from the drop in oil prices. In a recent note to clients, analysts at Goldman Sachs highlighted the following commentary from Phillips 66 CEO Greg Garland, who said, “I think people are discounting the impact of $US50 crude globally in terms of economic activity, demand for petrochemical products. In fact, we’re seeing increased demand for even refined products.”
4. Wall Street continues to digest the news that American Express and Costco will no longer offer co-branded credit cards, and the reception from analysts is less than stellar. In a note to clients following the news, analysts at Oppenheimer wrote that, “Our takeaway as we look into 2015/2016 is that everything is moving in the wrong direction: revenues are under pressure; expenses are rising; and provisions are more likely to rise than fall.”
5. On the economic data front, the latest reading on consumer confidence from the University of Michigan showed that confidence retreated in February, with the index falling to 93.6 from 98.1 at the end of last month. January’s reading was an 11-year high, and Wall Street economist had expected the number to be unchanged. In a note to clients following the report, Jesse Hurwitz at Barclays wrote, “We read the details of the preliminary February report as consistent with the move higher in gasoline prices in early February.”
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