Advertisement

Stocks rise again as technology companies and Amazon jump

Stocks rise again as technology companies and Amazon jump
People walk past the New York Stock Exchange in June 2016. (Richard Drew / Associated Press)

U.S. stocks climbed Wednesday, driven by gains for big technology companies and Amazon. The Standard & Poor’s 500 index and Nasdaq composite finished at record highs for the fourth day in a row.

Stocks have rallied over the last four days as investors grew more hopeful about trade talks among the United States, Mexico and Canada. Canadian Prime Minister Justin Trudeau said Wednesday that Canada could join a trade pact between the United States and Mexico by Friday.

Advertisement

The Commerce Department said the U.S. economy was a bit stronger than it previously thought. It said gross domestic product grew 4.2% in the second quarter. Stronger business investment was a big reason, as companies spent more money on items such as software.

“Corporate spending is up, which is something that is very important for the overall economy,” said Quincy Krosby, chief market strategist at Prudential Financial.

Technology companies, including Apple, Microsoft and Alphabet, made strong gains.

The S&P 500 advanced 16.52 points, or 0.6%, to 2,914.04. The Dow Jones industrial average rose 60.55 points, or 0.2%, to 26,124.57. The Nasdaq composite jumped 79.65 points, or 1%, to 8,109.69.

The Russell 2000 index of smaller-company stocks advanced 6.33 points, or 0.4%, to 1,734.75. It also closed at a record high.

Technology firms and other large companies started climbing Friday as news reports suggested a breakthrough on trade was near. On Monday, the White House said it had reached a preliminary deal with Mexico to replace the North American Free Trade Agreement. Mexico is the United States’ third-largest trading partner and Canada is its second-largest, behind China.

The S&P 500 has risen 3.5% in August after a 3.6% gain in July. That two-month gain is its best since late 2015.

Amazon jumped 3.4% on Wednesday to $1,998.10 after a Morgan Stanley analyst raised his price target on its stock to $2,500 from $1,850. At that higher target price, Amazon would have a market value of $1.2 trillion.

“We have increasing confidence that Amazon's rapidly growing, increasingly large, high-margin revenue streams (advertising, Amazon Web Services, subscriptions) will drive higher profitability,” Brian Nowak wrote.

Apple became the first publicly traded company to reach the $1-trillion mark early this month. Investors currently value the iPhone maker at almost $1.08 trillion to Amazon's $975 billion.

Other retailers struggled. Dick's Sporting Goods slid 2.2% to $35.60 after its sales fell short of expectations. The company said its sales of Under Armour products dropped significantly because of that company's decision to expand distribution of its apparel to other stores.

Chico's FAS fell 4.1% to $8.47 after its quarterly report, and watchmaker Movado sank 15.4% to $41.80. Tiffany sank 4.3% to $125.48 and Kohl's fell 1.9% to $77.34.

Footwear seller Shoe Carnival surged 13.1% to $41.74 after it raised its annual forecasts following a better-than-expected second quarter. The company said back-to-school sales are off to a good start.

Homebuilders fell after the National Assn. of Realtors said fewer Americans signed contracts to buy homes in July compared with the previous month. High home prices and rising mortgage rates are pushing home sales down even though economic growth is solid.

Advertisement

TopBuild declined 2.7% to $65.10, and fellow homebuilder TRI Pointe fell 2.4% to 14.42.

The companies also lost ground Tuesday after the S&P-Case Shiller index showed that home prices rose 6.3% in July, a slower pace than the month before.

Yum China climbed 5.5% to $39.23 after the Wall Street Journal reported that a group of investors offered to buy it for $46 per share, or $17.6 billion. The Journal said that the offer was made in recent months and that Yum China rejected it.

Roku slumped 4.9% to $59.92 following a report that Amazon may challenge it with an ad-supported video service. The Information said Amazon would offer the service through its Fire TV devices, which are owned by about 48 million people.

Energy companies rose along with oil prices.

Benchmark U.S. crude rose 1.4% to $69.51 a barrel in New York. Brent crude, used to price international oils, rose 1.6% to $77.14 a barrel in London.

Wholesale gasoline rose 1.3% to $2.11 a gallon. Heating oil rose 1.4% to $2.24 a gallon. Natural gas rose 1.5% to $2.90 per 1,000 cubic feet.

Gold fell 0.2% to $1,211.50 an ounce. Silver fell 0.5% to $14.70 an ounce. Copper fell 1% to $2.71 a pound.

Bond prices were little changed. The yield on the 10-year Treasury note stayed at 2.88%.

3:10 p.m.: This article was updated with closing prices, context and analyst comment.

This article was originally published at 8:20 a.m.

Advertisement
Advertisement