By Sue Chang, MarketWatch , Ryan Vlastelica
Cisco underpinned Dow's triple-digit gains
The Dow rose to close above the 25,000 mark Thursday for the
first time in nearly two weeks as U.S. stocks finished higher for a
fifth straight session in volatile trade.
Wall Street opened solidly higher but subsequently lost ground
before recouping losses, supported by the latest data on inflation
and the labor market, which pointed to an economy that was growing
but in no imminent danger of overheating. Strong results at Cisco
also highlighted how American corporations continue to fare well in
the current environment.
How did the main benchmarks perform?
The Dow Jones Industrial Average rose 306.88 points, or 1.2%, to
25,200.37. The S&P 500 added 32.57 points, or 1.2%, to
2,731.20. The Nasdaq Composite gained 112.81 points, or 1.6%, to
7,256.43.
So far this week, the Dow and the S&P are both up more than
4% and on track for their biggest weekly percentage rise since
November 2016. The Nasdaq is up over 5%, which represents its best
week since October 2014.
Those gains come after sharp losses seen earlier this month,
which pushed the Dow and S&P into correction territory, or a
10% drop from a peak. The three gauges stand between 4% and 6%
below last month's all-time highs. The selloff was sparked in part
by rising bond yields amid signs of an uptick in inflation, with
the higher yields luring money out of equities. Strategists have
said the selloff was overdue, but was excessive
(http://www.marketwatch.com/story/this-market-selloff-was-overdue-but-now-it-looks-overdone-strategists-say-2018-02-10).
Read more:Don't be scared by rising inflation and weak retail
sales
(http://www.marketwatch.com/story/dont-be-scared-by-weak-retail-sales-and-rising-inflation-2018-02-14)
Don't miss:Here's a 10-step plan the stock market must complete
to get back on track
(http://www.marketwatch.com/story/heres-a-10-step-plan-the-stock-market-must-complete-to-get-back-on-track-2018-02-13)
What were strategists saying?
"This is a year of recalibration. In January we recalibrated to
higher earnings, and now we're doing it for higher bond yields,
which have been led by potentially higher inflation," said Leo
Grohowski, chief investment officer of BNY Mellon Wealth
Management. "Market participants are correctly focusing on
inflation, because a rise in inflation can preface an economic
slowdown, or an increase in interest rates that could lead to
one."
Grohowski remains optimistic about the market, noting that his
firm's year-end target for the S&P 500 was 2,850. However, he
expects the recent volatility to persist as investors struggle
between the prospect of higher rates on one hand and strong
fundamentals on the other.
"This tug of war will be with us for the year, but I think the
market is becoming more comfortable with the idea that a little bit
of inflation will be OK," said Grohowski, who helps oversee $238
billion in total client assets.
"Volatility could remain a staple of the markets in 2018, but
there is no need to panic. Non-recessionary market pullbacks tend
to be relatively short-lived, while major one-day market selloffs,
historically, are typically followed by better-than average
returns," Joe Quinlan, head of thematic strategy at Bank of America
Global Wealth and Investment Management, said in a note to
investors.
Quinlan shared the following chart which shows how market
declines tend to be short-lived when the economy is not in a
recession.
Market peaks from 1945-2017
What drove the markets?
In the latest economic data, initial jobless claims rose 7,000
to 230,000 in the latest week
(http://www.marketwatch.com/story/jobless-claims-edge-up-7000-to-230000-2018-02-15),
as had been expected, but claims remain near multidecade lows.
Separately, wholesale prices rose 0.4% in January
(http://www.marketwatch.com/story/us-wholesale-inflation-hits-nearly-6-year-high-adds-to-case-for-fed-rate-hike-2017-12-12),
led by a rise in oil prices, though core producer prices were also
up by 0.4%. The figure was the latest view on inflation, following
Wednesday's consumer-price index.
Two gauges of manufacturing sentiment underscored solid growth
in February
(http://www.marketwatch.com/story/philly-empire-manufacturing-gauges-show-continued-solid-growth-in-february-2018-02-15).
The Philadelphia Fed manufacturing index rose to 25.8 in February
from 22.2 in January. Economists had expected a slight retreat to
21. The Empire State Index, meanwhile slowed to 13.1 in February
from 17.7 in January, the New York Fed said. While the Empire State
index was well above the level indicating improving conditions,
this was a weaker reading than had been anticipated.
Mortgage rates have climbed to the highest level in close to
four years
(http://www.marketwatch.com/story/mortgage-rates-rise-to-nearly-four-year-high-on-inflation-concerns-2018-02-15),
according to data released Thursday.
See:MarketWatch's Economic Calendar
(http://www.marketwatch.com/economy-politics/calendars/economic)
What were other assets doing?
European stocks closed in positive territory across the board,
while Asian markets were sharply higher
(http://www.marketwatch.com/story/asian-markets-get-off-to-fast-start-ahead-of-holiday-2018-02-14),
though volumes in much of the region were capped with some Asian
markets closed for the Lunar New Year holiday.
The ICE U.S. Dollar Index was off 0.6%, oil futures
(http://www.marketwatch.com/story/oil-prices-add-to-gains-after-best-day-in-months-2018-02-15)
rose more than 1% and gold settled moderately lower.
Check out:Why the U.S. dollar found no love despite
stronger-than-expected inflation
(http://www.marketwatch.com/story/heres-why-the-us-dollar-is-nobodys-valentine-2018-02-14)
Which stocks were key movers?
Shares in Cisco Systems Inc.(CSCO) jumped 4.7% for the biggest
gain among Dow components. The tech giant's earnings and outlook
topped Wall Street estimates late Wednesday
(http://www.marketwatch.com/story/cisco-stock-approaches-post-2000-highs-after-earnings-show-revenue-growth-again-2018-02-14),
and the company also showed revenue growth for the first time in
more than a year and a half. The stock has gained more than 13%
thus far this year, making it the second-best performer among Dow
stocks, behind Boeing Co. (BA).
Read:Cisco turns corner in tough transition to a new era
(http://www.marketwatch.com/story/cisco-earnings-show-turnaround-success-stock-zooms-toward-post-2000-highs-2018-02-14)
And see:Cisco is 'putting together newer growth
engines'--analysts react to earnings
(http://www.marketwatch.com/story/cisco-is-putting-together-newer-growth-engines-analysts-react-to-earnings-2018-02-15)
Apple Inc. (AAPL) rose 3.4% on news that Warren Buffett's
Berkshire Hathaway Inc. raised its stake in the iPhone maker
(http://www.marketwatch.com/story/warren-buffetts-berkshire-hathaway-adds-apple-and-teva-shares-cuts-ibm-stake-2018-02-14)
by 31.24 million shares to 165.33 million shares at the end of
December.
Shares in TripAdvisor Inc.(TRIP) climbed 4.1% after the online
travel company posted better-than-expected earnings
(http://www.marketwatch.com/story/tripadvisor-soars-20-higher-after-earnings-show-bullish-forecast-2018-02-14)
late Wednesday.
Shares in McDonald's Inc.(MCD) advanced 0.5% after the fast-food
heavyweight announced a fresh worldwide push to make its Happy Meal
offerings healthier, including taking away the cheeseburger as an
entree choice in the U.S. "The cheeseburger will only be available
at a customer's request," the company said in a news release
(http://news.mcdonalds.com/news-releases/news-release-details/mcdonalds-announces-global-commitment-support-families-0).
Shares in Avon Products Inc.(AVP) jumped 13% after the
beauty-products seller posted adjusted quarterly earnings that beat
forecasts, but revenue that missed expectations.
AntaresPharma Inc. (ATRS) rallied 19% while Amag Pharmaceuticals
Inc. (AMAG) surged 29% after Amag said the U.S. Food and Drug
Administration has approved
(http://www.marketwatch.com/story/antares-pharma-amag-pharma-shares-soar-premarket-after-fda-approves-auto-injector-2018-02-15)
their Makena subcutaneous auto injector drug-device combination
product.
--Victor Reklaitis contributed to this report
(END) Dow Jones Newswires
February 15, 2018 16:23 ET (21:23 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.