NEW YORK (Reuters) – Global equities edged higher and the dollar fell to two-year lows on Tuesday as the broad U.S. stock market scaled new peaks helped by better-than-expected corporate earnings by retailers such as Walmart reporting record online sales.
Both the Nasdaq Composite and S&P 500 set records soon after the opening bell following strong sales growth as reported by major U.S. retailers including Walmart, Kohl’s and Home Depot.
The benchmark S&P 500 index topped an all-time peak reached in February just before the onset of COVID-19. The tech-heavy Nasdaq hit a record high for the second consecutive day in a session where declining stocks outnumbered rising shares.
(Graphic: S&P 500’s bull-to-bear, bear-to-bull journey in 6 months here)
Neil Wilson, chief market analyst at Markets.com in London, said stocks have been steadily marching higher since a pullback in June, so the record was expected given the large infusions of stimulus by the Federal Reserve and government deficit spending.
“I’m still surprised we got there without additional stimulus. But my instinct is that this is too high, it looks massively overbought. I mean, it’s not sustainable looking at the earnings,” Wilson said.
Stephane Barbier de la Serre, macro strategist at Makor Capital Markets in Geneva, said the fresh highs in U.S. equities wasn’t much of a surprise and he expected further gains.
“I don’t seen how markets could go down without an exogenous shock of some sort on the macro or the pandemic side,” Barbier said of the near future. “In the absence of a game-changer, I don’t see markets turning around.”
The near-doubling of online sales in the second quarter helped Walmart Inc trounce Wall Street expectations for quarterly profit and same-store sales.
The S&P 500 gained 0.32%, led by Amazon.com and the Nasdaq Composite added 0.76%. The Dow Jones Industrial Average fell 0.09%.
In Europe, the broad FTSEurofirst 300 index closed down 0.52% at 1,424.85, MSCI’s world equity index of equity markets in 49 nations rose 1.97 points or 0.34%, to 573.85.
(Graphic: S&P 500 PE revisits dot-com highs here)
Gold rose more than 1% to climb back above the $2,000 level breached earlier this month, as the dollar fell against a basket of major currencies for a fifth consecutive trading day, under pressure from low yields and mostly bleak U.S. economic data.
The Fed’s intervention in financial markets to maintain liquidity in the midst of the coronavirus pandemic has weakened the dollar, pushed risk assets to all-time highs and reduced demand for safe-havens.
The dollar index fell 0.572%, with the euro up 0.55% to $1.1934. The Japanese yen strengthened 0.57% versus the greenback at 105.41 per dollar.
Spot gold prices rose 0.90% to $2,003.47 an ounce. U.S. gold futures settled up 0.7% at $2,013.10.
U.S. housing starts jumped 22.6% in July in the latest sign homebuilding is emerging as one of the few areas of strength in an economy suffering a record slowdown because of the pandemic.
U.S. Treasury yields slid as the market largely snubbed the strong housing data and looked for signs that a political stalemate in Washington over a round of aid was easing.
The benchmark 10-year Treasury note fell 1.3 basis points to yield 0.6704%.
Oil prices slipped after holding steady earlier in the session, as demand fears weighed despite high compliance with production cuts from members of the OPEC+ producer group.
Brent crude futures rose 9 cents to settle at $45.46 a barrel. U.S. crude futures settled unchanged at $42.89 a barrel.
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