The Nasdaq broke to a new all-time high on Thursday, supported by solid earnings from several key technology stocks and a lower threshold of crisis news from Europe and the Middle East.
The Nasdaq closed 1.3% higher and hit its first record closing high since June 23. The index was buoyed by better-than-expected earnings from Intel Corporation (INTC), Netflix, Inc. (NFLX) and eBay Inc (EBAY), as well as better news from Greece. The Greek Parliament voted in favor of austerity measures that would, if implemented, allow the country to remain as a full member of the EU.
The financial sector received a boost from Citigroup Inc (C), which rose 3.8% following the release of its quarterly earnings. But Goldman Sachs Group Inc (GS) fell 0.9% following a disappointing Q2 earnings report that was negatively impacted by mortgage-related litigation.
European stocks jumped following the European Central Bank’s (ECB) lending increase to Greek banks. Germany’s DAX rose 1.5% and France’s CAC 40 was up 1.4%.
Crude oil futures closed at $50.91 a barrel, down 1%, and gold lost 0.3% to close at $1,143.80 an ounce. The yield on the benchmark 10-year Treasury note was unchanged at 2.35%.
At Thursday’s close, the Dow Jones Industrial Average rose 70 points to 18,120, the S&P 500 gained 17 points at 2,124, the Nasdaq jumped 64 points to a new all-time closing high at 5,163, and the Russell 2000 was up 8 points at 1,273.
The NYSE’s primary market traded 723 million shares with total volume of 3.2 billion. The Nasdaq crossed 1.8 billion shares. On the Big Board, advancers outpaced decliners by 2.3-to-1, and on the Nasdaq, advancers led by 1.6-to-1.
It may be difficult to see on this long-term daily chart of the Nasdaq, but the index’s prior closing high of 5,160.09, achieved in June, was eclipsed by Thursday’s new close. With a clear bull channel in which prices cycled around the 50-day moving average, there is little doubt that the Nasdaq is headed higher.
Technology stocks and mid-to-small-cap financials make up a high proportion of the Nasdaq’s roster, and those two groups (including biotechs) are the best-performing sectors.
The S&P 500 may not have hit a new high Thursday, but Tuesday’s slice through its 50-day moving average at 2,101 was impressive. The follow-through was confirmation that this was no dead-cat bounce.
Conclusion
The financial sector, and especially mid-cap banks and finance companies, will benefit from an increase in rates. And now that Federal Reserve Chair Janet Yellen has all but confirmed the hike in near-term rates this year, investors would be smart to hop aboard before prices get out of hand.
For investors who would like to reduce the risk of owning individual stocks, there are excellent ETFs. This year, I’ve covered iShares NASDAQ Biotechnology Index (ETF) (IBB), SPDR KBW Regional Banking (ETF) (KRE), SPDR KBW Bank (ETF) (KBE), iShares Dow Jones US Technology (ETF) (IYW) and PowerShares QQQ Trust, Series 1 (ETF) (QQQ). These ETFs still look like good values that will participate in the continuing bull market.
“Be long or be wrong.”
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.
