VOL. 42 | NO. 23 | Friday, June 08, 2018
Stocks mostly rise following Trump-Kim summit
NEW YORK (AP) — Stocks mostly rose in a quiet Tuesday session, as investors reacted calmly to the outcome of a meeting between President Donald Trump and North Korean leader Kim Jong Un, and turned their attentions to this week's trio of central bank meetings.
The Standard & Poor's 500 index rose 4.85 points, or 0.2 percent, to 2,786.85, closing at its highest level since February 1. The Nasdaq composite added 43.87 points, or 0.6 percent, to 7,703.79 and the Dow Jones industrial average fell 1.58 points, or less than 0.1 percent, to 25,320.73. The Russell 2000, an index that makes up mostly small companies, rose 7.62 points, or 0.5 percent, to 1,682.30.
Both the Russell and the Nasdaq set new record highs.
Trump and Kim concluded their summit by committing to working "toward complete denuclearization of the Korean Peninsula" and to "build a lasting and stable peace regime" on the Korean Peninsula.
The broad promises largely reiterated past agreements, while many of the details were left vague and there was no agreement on ending the technical state of war between North and South Korea. A potential deal has the chance of lowering geopolitical tensions in a region surrounded by three of the world's largest economies: Japan, China and South Korea.
"Deal or no deal? Just don't ask what comprises a 'deal' and we are fine. At the risk of sounding a tad frivolous, that appears to be the truth of the matter," said Vishnu Varathan of Mizuho Bank in Singapore of the Trump-Kim summit.
Following the Trump-Kim summit, shares of weapons makers and defense contractors were among the biggest decliners in the S&P 500. Raytheon lost nearly 3 percent to $206.61, Lockheed Martin fell 1.3 percent to $315.16 and Northrop Grumman fell 1.5 percent to $329.35.
With geopolitical issues set aside, investors turned their attention toward the current health of the U.S. economy.
The Federal Reserve started a two-day meeting on interest rates on Tuesday. Investors expect the central bank to raise its benchmark rate by a quarter of a percentage point to a range of 1.75-2 percent. However investors' attention will focus more on how many additional rate hikes Fed officials may do this year.
The government said that U.S. consumer prices rose 0.2 percent in May, with surging gasoline costs driving much of the increase. The Labor Department said Tuesday that the consumer price index climbed 2.8 percent last month from a year earlier, putting inflation on its fastest annual pace since February 2012. But core prices — which exclude the volatile food and energy categories — have risen a milder 2.2 percent over the past 12 months.
Fed officials have been closely watching inflation data, since they have a target of inflation being roughly 2 percent per year. Since core inflation is still tame likely means that the Federal Reserve will raise interest rates only gradually.
On Thursday, the European Central Bank will meet and could outline an end to its stimulus program, while on Friday the Bank of Japan is due to give its latest policy update.
After the market close, investors welcomed news that the $85 billion merger between AT&T and Time Warner will be allowed to go through. The Trump administration had sued to block the proposed merger and a rejection likely would have chilled possible multi-billion dollar deals between 21st Century Fox and Walt Disney; Verizon and CBS; and T-Mobile and Sprint.
Following the judge's decision, shares of Time Warner rose 4 percent and AT&T shares fell 2 percent
Shares of electrical car company Tesla rose $10.67, or 3 percent, to $342.77 after the company announced it would lay off 9 percent of its work force in order to boost profitability. The layoffs target white collar staff, not production workers.
Benchmark U.S. crude closed up 26 cents to $66.36 a barrel. Brent crude, used to price international oils, fell 69 cents to $75.77 per barrel in London.
Gold prices fell $3.80 to $1,295.10 an ounce, silver fell 6 cents to $16.89 an ounce and copper fell less than a penny to $3.2495 a pound.