Healthcare Helps Indices Set Records

Healthcare Helps Indices Set Records

The S&P 500 Index closed at a record level on Monday evening, bringing the number of record closes set by the index in 2014 to a total of 42.

Healthcare Helps Indices Set Records
Healthcare Helps Indices Set Records

With the blue-chip index boasting substantial gains on Tuesday, that number was on target to advance to 43 with just a couple of hours of trading remaining to the closing bell.

By mid-afternoon in New York, the S&P 500 Index had climbed 0.54% or 11.1 points to 2052.4, after earlier hitting as high as 2053.26, an all-time intraday record. The Dow Jones also set a new intraday high of 17,708.30 and was trading just a few points below that level at the time of writing, up 0.31% or 55 points.

Gains were bolstered by some upbeat macroeconomic reports and news that pharmaceutical manufacturer Actavis ($ACT) is set to acquire rival Allergan ($AGN) in a $66 billion deal. The healthcare sector was buoyant as whole, with substantial gains also seen in Gilead Sciences, Valeant Pharmaceuticals and other leading biotechs.

Homebuilder confidence rises
A report from the National Association of Home Builders (NAHB) shows sentiment among US house builders is rising, responding to low mortgage rates and the upward-trending jobs market in a similarly positive manner to other recent housing indicators. The NAHB housing market index advanced to a level of 58 this month from October’s 55, close to September’s 59 which was the highest reading of year so far. More information on the housing sector is available tomorrow morning with the release of October’s housing starts data.

The Producer Price Index for Final Demand rose to a surprise 0.2% in October (a 0.1% decline had been expected), following a 0.1% dip in the month prior. Stripping out the more volatile components of food and energy shows an even sharper rise in prices, with a 0.4% jump at this core level, with the advance largely driven by increases in the costs of services. Year-on-year, the rises look more tame though, with a seasonally-adjusted 1.5% change in October, compared to 1.6% in September. Though rising costs at the wholesale level will not go unnoticed by the Fed, it is likely that we would need to see retail inflation warming up alongside wage inflation for the Fed to start seriously altering their outlook.

Yen weakens again
In the forex market, the yen weakened again after Japanese Prime Minister Shinzo Abe confirmed what had been the subject of market speculation over the last week, namely that he is calling a snap election and deferring a rise in consumption tax that had been scheduled for next year.

The Bank of Japan will finish a two-day meeting on Wednesday, to be followed by a statement of monetary policy (the exact time of this release is undetermined, as is customary for the Bank of Japan). By mid-afternoon on Tuesday, USD/JPY was up 0.15% at 116.83.

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