 "Dynamic Capital")
Tuesday morning, US financial markets hit record heights yet again as oil prices increased and investors were given confidence by strong earnings reports from some of the top American retail corporations. Wal-Mart lead the way as its share provided the biggest boost to the Dow, increasing over 3% after the company exceeded expectations with its quarterly earnings report. Department store, Macy’s, and home improvement center, Home Depot, shares also saw substantial gains after the companies’ earnings both matched projections, a task proving harder and harder with increased competition from online retailers such as Amazon and eBay driving prices down.
The 1.5% rise in oil prices boosted investor outlook as OPEC explained the organization expected its members to better comply with its deal to cut production and continue lowering oil supply to increase the price. The news sent energy companies up 0.75% according to the S&P 500 .SPNY Energy index, led by gains in Schlumberger and Chevron. The combination of strong earnings, positive economic data (pointing to increased demand, rising wages and an overall strong economy), and expectations of fiscal stimulus delivered by Donald Trump through infrastructure spending has continuously lifted Wall Street’s major indexes to record highs over the past few months.
Loretta Mester, President of the Cleveland Federal Reserve district, indicated on Sunday to reporters that she would feel good about raising the federal funds rate if the US economy kept performing the way it has been, sending the dollar up 0.58% and gold down 0.74%. Several Federal Reserve officials are expected to speak to the press later Tuesday about the timing of the next interest rate hike, keeping investors on the edge of their seats as they await the latest information. While several officials have said the hike should be expected sooner rather than later, Neel Kashkari, the President of the Minneapolis Federal Reserve branch, said he believed the US labor market still had more room to run, meaning he is a little more on the patient side than many of his counterparts.
Early Tuesday morning, all three major US indexes – the Dow, the S&P 500 and the NASDAQ – were in positive territory, and nine of the eleven major S&P 500 sectors were higher as the traditionally defensive plays, like real estate and utilities, lagged. The popular fast food chain, Popeyes Louisiana Kitchen, soared nearly 20% as news broke of its acquisition of Restaurant Brands – a quick-service restaurant chain – for $1.8B. Kraft Heinz was the biggest loser on the S&P 500, as investors learned of the company walking away from $143B offer to buy Unilever, one of its main competitors, as the Anglo-Dutch corporation instantly rejected the proposal.