Tech Strength Lifts U.S. Stocks to New Heights

By Mike Bird and Kenan Machado Features Dow Jones Newswires

Global equity markets extended recent gains Wednesday, with European and Asian stocks following the tech-driven advances that have propelled U.S. stocks to fresh records.

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The Stoxx Europe 600 index was up 0.3% at around midday in Europe, helped by a 0.7% rise in European technology sector.

U.S. equity futures pointed to further gains ahead of market open in New York, with the S&P 500 and Dow Jones Industrial Average each up by 0.2%.

A surge in tech stocks sent the Nasdaq Composite Index above 7,000 for the first time on Tuesday.

The U.S. dollar steadied after falling for a seventh-straight session, according to the WSJ Dollar Index, up 0.1% against a basket of international currencies. But the greenback remains near its lowest levels in over three months.

The dollar is vulnerable to further weakness accord to some analysts. Lee Hardman, a currency analyst at MUFG, said he believes a multiyear dollar bear market is beginning, with further rapid declines possible.

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"Historical precedent continues to suggest that our outlook for more modest U.S. dollar weakness in 2018 could prove too cautious," Mr. Hardman said.

The euro dipped 0.4% to $1.202 in early European trading, after hitting its highest New York closing price in three years Tuesday. Some investors expect the euro to continue strengthening on the back of unexpectedly strong economic conditions.

"Europe continues to enjoy the most important growth acceleration that we've seen in over a decade," said Alessio DeLongis, portfolio manager at OppenheimerFunds.

"We think it's an environment that's conducive to inflows into Europe, into equities particularly, and therefore into the euro," he added.

In bond markets, yields on Germany's 10-year government bonds dipped slightly to 0.434%, erasing most of Tuesday's rise, while 10-year U.S. Treasury yields fell slightly to 2.452%. As recently as September, 10-year yields were as low as 2.03%.

"People really need to pay attention to what bond markets are telling you," said Stephen Macklow-Smith, head of Europe equity strategy at J.P. Morgan Asset Management. "We're in an environment where central banks are starting to retreat from outright monetary stimulus."

"You've seen 10-year rates picking up almost everywhere, and in stocks that means a move from defensives to cyclical equities," he added.

Leading Asia-Pacific equities Wednesday was China, where stocks outside of the biggest companies badly lagged behind 2017's global rally. The country's Shenzhen A-share index rose by 0.8%.

Hong Kong's Hang Seng Index closed up 0.2% after having earlier touched a fresh 10-year intraday high.

Japanese markets were closed and won't open for their first day of trading in 2018 until Thursday.

Overall, investors appear to be seeking value in Asian stocks, according to an analysis by Instinet, with increased buying of companies with low price-to-earnings multiples. On that basis, the region's equities are generally cheaper than in Europe or the U.S.

The Taiex in Taiwan, where many Apple suppliers are based, climbed 0.9% to hit a fresh five-week high. South Korean giant Samsung Electronics rose 1.2%, helping the benchmark Kospi gain 0.3%.

Fresh intraday records were registered Wednesday in New Zealand, Thailand and the Philippines--the latter two strengthening 1% and 2% respectively.

Bitcoin dipped back below $15,000, according to price data from CoinDesk, after an overnight jump fueled by Silicon Valley venture-capital firm Founders Fund making a big bullish bet on the cryptocurrency.

Write to Mike Bird at Mike.Bird@wsj.com and Kenan Machado at kenan.machado@wsj.com

Technology firms led major U.S. stock indexes to fresh intraday records Wednesday, a day after the Nasdaq Composite closed above 7,000 for the first time.

Rallying semiconductor stocks have boosted the broader technology sector at the start of 2018, after the PHLX Semiconductor Index added nearly 40% last year. The makers of computer chips used in everything from smartphones to self-driving cars have gotten a boost recently from a Semiconductor Industry Association report that showed a 21.5% increase in world-wide chip sales in November from the same month a year earlier, according to analysts.

Despite concerns among some analysts that technology stocks have gotten too pricey relative to earnings, some investors think continued strength in profits and sales could justify further share-price gains.

"As long as you've got the growth, I think you can make the case that your trajectory is going to continue to go up without too much of a bubble fear," said Katrina Lamb, head of investment strategy and research at MV Financial.

The Dow Jones Industrial Average added 76 points, or 0.3%, to 24900. The S&P 500 rose 0.6% and the Nasdaq climbed 0.8%.

Advanced Micro Devices added 8.2%, while Nvidia climbed 5.7%, extending gains from Tuesday. Meantime, Intel shares fell 5.2% after British publication The Register reported that some Intel processors have a fundamental design flaw that would require a significant security update of Linux and Windows operating systems. The S&P 500 information technology sector rose 1%.

Energy stocks were also among the biggest gainers Wednesday, climbing alongside crude oil prices amid antigovernment protests in Iran that could lead to supply disruptions.

Corporate news drove swings among individual stocks.

Scana shares climbed 22% after Dominion Energy said it has struck a deal to buy the troubled energy firm in an all-stock transaction valued at about $7.66 billion and absorb some of the costs of Scana's failed South Carolina nuclear project. Dominion Energy shares declined 5.3%.

Shares of Valeant Pharmaceuticals rose 6.5% following the firm's announcement that it paid down an additional $300 million in debt with cash on hand.

Investors were awaiting minutes from the Federal Reserve's December meeting, scheduled to be released later Wednesday. The central bank raised rates for a third time in 2017 at the meeting and stuck to its projections for three more increases this year. Some analysts have said they would be parsing the Fed's discussion of muted inflation and its assessment of how tax changes could impact the economy.

The yield on the benchmark 10-year U.S. Treasury note fell to 2.443%, according to Tradeweb, from 2.465% Tuesday. Yields fall as bond prices rise. The 10-year yield has rebounded from its September lows, when it closed as low as 2.058%.

The dollar steadied after falling for a seventh straight session Tuesday, with the WSJ Dollar Index -- which tracks the U.S. currency against a basket of 16 others -- up 0.2% from its lowest level since September.

Elsewhere, technology stocks propelled the Stoxx Europe 600 index to a 0.5% gain. The euro fell 0.3% against the dollar, after hitting its highest closing price in three years Tuesday. Some investors expect the euro to continue strengthening on the back of unexpectedly strong economic conditions.

"Europe continues to enjoy the most important growth acceleration that we've seen in over a decade," said Alessio DeLongis, portfolio manager at OppenheimerFunds.

"We think it's an environment that's conducive to inflows into Europe, into equities particularly, and therefore into the euro," he added.

The Shanghai Composite Index added 0.6%, climbing for the fourth straight session. Hong Kong's Hang Seng Index closed up 0.1% -- its highest close in more than a decade. Japanese markets were closed and won't open for their first day of trading in 2018 until Thursday.

-- Kenan Machado contributed to this article.

Write to Amrith Ramkumar at amrith.ramkumar@wsj.com and Mike Bird at Mike.Bird@wsj.com

(END) Dow Jones Newswires

January 03, 2018 13:50 ET (18:50 GMT)