A dovish turn by the US Federal Reserve cooled the greenback and helped propel US stocks this week, with the NASDAQ scoring especially impressive gains.
The tech-rich index surged 154.66 points (3.17 percent) on the week to 5,026.42, finishing only about 22 points below its record struck in the year 2000.
The Dow Jones Industrial Average jumped 378.34 (2.13 percent) to 18,127.65, while the broad-based S&P 500 advanced 54.66 (2.66 percent) to 2,108.06. The week was dominated by Wednesday’s Fed policy statement, which had been anticipated for clues on when the US central bank intended to hike interest rates.
The Fed dropped a pledge to remain “patient” on raising interest rates, signaling a midyear federal funds rate hike remained possible after keeping the key rate at the zero level for more than six years.
However, other language in the Fed’s statement emphasized that the central bank was in no rush to hike the ultra-low rates, which have supported the stock market. The Fed also broadly lowered its outlook on the US economy this year.
“There were people on the sidelines waiting” for the Fed meeting, Ventura Wealth Management portfolio strategist Tom Cahill said.
“They were forced back into the market,” he said.
US stocks surged on Wednesday and — after a partial pullback on Thursday — again on Friday. Part of the good cheer was from a retreat in the US dollar, which had surged near parity with the euro earlier in the week.
“The market is cheering the news that the Fed rate increase will happen later in the year than previously thought,” Kenjol Capital Management portfolio manager David Levy said.
However, Levy said volatility could pick up again in the coming weeks due to lingering concerns about the strong dollar and weak oil prices, among other issues.
The NASDAQ’s outperformance was spurred in part by positive news-flow from Apple, the world’s biggest publicly traded company by market value.
Apple got a lift from reports that it is in talks with CBS, ABC and other networks to offer a slate of television broadcasts across its devices.
The other big winner this week was Biogen, which sparked a rally in the biotech sector when it reported promising clinical results for its aducanumab drug to treat Alzheimer’s disease.
In other corporate news, Valeant Pharmaceuticals International sealed its deal to take over Salix Pharmaceuticals after raising its bid by 10 percent US$173 per share or US$15.8 billion in cash. Following the sweetened Valeant bid, Endo International withdrew a competing offer.
On Friday, US mall giant Simon Property Group raised its bid for Macerich Co by 5 percent to US$16.8 billion. Macerich had rejected the earlier bid.
US coffee giant Starbucks hit a 52-week high after announcing a stock split, even as the company ran into criticism from some on social media over its “Race Together” initiative, which encourages baristas to engage customers in a discussion of race.
Next week’s calendar includes existing home sales, new home sales and durable goods orders for last month.
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