Dow Jones rises but Nasdaq takes a tumble
Pandora Media on a high note after investment from Sirius XM
Dupont Fabros the top riser on the NYSE after agreeing to bid from Digital Realty
While the Dow marched on to a new record high, the Nasdaq Composite tumbled, as investors banked recent gains on tech stocks.
The Nasdaq Composite fell 1.8%, or 114 points, to 6,208, which was a much greater fall than was suffered by the market benchmark, the S&P 500, which lost two points at 2,432.
The Dow, meanwhile, rose 89 points to 21,272, led by drugs giant Pfizer Inc (+3.2%), investment bank JPMorgan Chase & Co (+2.4%) and oil giants Chevron Corp (+2.3%).
On the Nasdaq, glamor stock Apple had its worst day since January 2016, sliding 3.9%. Other tech giants, such as Facebook, Amazon, Google owner Alphabet and Microsoft also got clobbered, after Goldman Sachs suggested the sector had been overbought.
In Canada, the S&P TSX Composite rose 50 points to 15,474.
1.00pm ... Profit takers move in on tech giants
Tech stocks dragged the Nasdaq Composite lower, even as the Dow and the S&P 500 made progress.
In lunchtime trading, the tech-heavy Nasdaq index was down 39 at 6,283, with giants such as Apple, Facebook, Google owner Alphabet, Twitter and Microsoft all sporting nasty bruises.
In contrast, the Dow Jones was up 91 points at 21,272 and the S&P 500 was 5 points better at 2,439.
At least one Nasdaq stock - Lexicon Pharmacueticals Inc (NASDAQ:LXRX) - was having a good day.
The stock climbed 6.9% to US$16.42 after the company revealed positive top-line results from a phase 3 study of sotalifilozin, a diabetes treatment.
10.01 ... Dow Jones up 84 at 21,265; S&P 500 up 9 at 2,443
As expected, blue-chips started higher, with the Dow and the S&P 500 both around 0.4% higher after half an hour’s trading.
The Dow Jones average was up 84 at 21,265 and the S&P 500 was 9 points firmer at 2,443.
Financial stocks led the advance, with solid gains seen for Goldman Sachs Group Inc, Morgan Stanley and Bank of America Corp.
On the New York Stock Exchange, data centers operator Dupont Fabros Technology Inc (NYSE:DFT) was the top riser after it agreed to a merger with Digital Realty Trust Inc (NYSE:DLR).
Dupont Fabros shares were changing hands at around US$62.52, up 12.9%, which is more or less the value of the all-stock offer from Digital Realty after the latter’s shares drifted .1% lower to US$115.57.
Pandora Media Inc (NYSE:P) jumped out of the box, rising 5.6% in early deals to US$8.89 after Sirius XM Holdings Inc (NASDAQ:SIRI) agreed to invest US$480mln in the music streaming pioneer.
Market preview
After eking out small gains yesterday, the main benchmarks looked set to move on to new highs this morning.
Spread betting quotes indicated the Dow Jones, which rose 9 to a new high of 21,182 yesterday, would open around 32 points higher this morning.
The S&P 500 was tipped to open at around 2,436.6, after adding half a point or so yesterday to close at 2,434.
There is little in store on the corporate news front, or on the macroeconomic front either, leaving traders and pundits to speculate about next week’s interest rate decision from the Fed.
Andreas Johnson, economist at SEB, the Nordic corporate bank, believes the US central bank will hike rates and announce a plan for balance sheet normalisation.
“The Fed’s communication clearly suggests a rate hike and a move is almost fully priced into markets; however, the recent weakness in inflation has clouded the outlook for monetary policy in H2 2017,” Johnson suggested.
“Arguably, the most interesting aspect of next week’s policy meeting would be a formal announcement of the Fed’s balance sheet reduction strategy. While we know from the May policy meeting that ‘nearly all’ FOMC members are in favour of an approach where reinvestments are reduced by a pre-announced schedule of gradually increasing caps, many questions remain unanswered; the US central bank has not specified an appropriate long-term size for the balance sheet and we do not know how long the process of normalisation will take,” Johnson continued.
“The Fed has said that additional details should be provided soon. Time is starting to run out and our interpretation is that a formal plan for balance sheet normalisation will be announced next week,” he added.
Shares in music streaming outfit Pandora Media Inc (NYSE:P) were off 2.1% at US$8.24 in pre-market trading despite Sirius XM Holdings Inc (NASDAQ:SIRI) committing to make a US$480mln in Pandora.
Sirius shares edged up a penny to US$5.41 on the news.