The Dow Jones Industrial Average closed at an all time record high on Friday pushing through the year’s February high of 26,702.7 to close at 26,726.3, whilst the S&P 500 also hit an all time high before selling off with the Nasdaq.
The rise in the Dow was driven by a 2.80 percent rise in McDonald's shares after the fast food company hiked its quarterly dividend by 14.9 percent to $1.16 per share. McDonald's was the best performer on the Dow with Cisco shares closely following 1.74 percent higher. Stocks that fell away included all of the FAANG momentum stocks ending the session lower, with Facebook, Apple Inc, Amazon.com Inc, Netflix Inc. and Alphabet Inc down between 1.1 percent and 1.9 percent. JP Morgan also came out and downgraded a number of homebuilder stocks after the investment bank cited housing recovery will be “tepid” and cautious about the sectors prospects. The homebuilders ETF XHB fell 0.25 percent along with PulteGroup down 0.49 percent. A notable mover also included shares of security and alarm company ADT Inc. as the stock jumped for a second day in a row, closing up 5 percent as Amazon introduced its new Alexa Guard service which could notify ADT of disturbances in the home.
There was little trade news coming from The White House and from Beijing, which for the better part of the year has unsettled markets at times. On Monday President Trump announced he would impose a 10 percent tariff on $200 billion worth of Chinese imports which would rise to 25 percent by the end of the year. In retaliatory measures, China announced on Tuesday it would target $60 billion worth of American goods. Investors were expecting a greater response from China, which didn’t happen and as such the Dow has rallied since along with trade sensitive stocks. Boeing shares were 1.24 higher for the session and 4.6 percent higher for the week and Caterpillar shares 0.22 percent higher and 7 percent higher for the week.
Markets are also bracing a S&P 500 sector reshuffle on Monday that will send Alphabet Inc, Netflix, Facebook and Twitter to the telecommunications sector which in turn will be renamed to be called the communications services sector. Disney and CBS will also be added to the group with will led to a 21.4 percent loss in market cap for the consumer discretionary sector and a 19.5 percent drop in the technology sector.
In currency markets, the US dollar edged higher however is till set for its largest weekly drop in seven months as stronger equity markets ad rising bond yields fueled a rush among investors to buy riskier assets. The dollar index was 0.32 percent higher at 93.79, the Australian dollar climbed to a three week high of $0.7297 and the pound fell nearly 1 percent to $1.3179 following Brexit concerns.
Important Notices for this week:
- FOMC Federal Funds Rate decision released 4:00am Thursday 27th September
- RBNZ Official Cash Rate decision released 7:00am Thursday 27th September
Chart of the Day: McDonald's Corp (MCD) Daily chart