Biogen falls after update on Alzheimer's drug
U.S. stocks closed higher on Thursday, with energy stocks helping major indexes to end points away from record territory. The latest economic data, which pointed to slight slowing from strong previous readings, further supported the market.
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What are indexes doing?
The Dow Jones Industrial Average rose 55.64 points, or 0.2%, to 24,782.29, ending well off its highs of the session. The S&P 500 added 5.32 points, or 0.2%, to 2,6854.57. The Nasdaq Composite Index rose 4.4 points to end at 6,965.35, a rise of less than 0.1%. The gains allowed the indexes to avert a three-day losing streak, while leaving the Dow and the S&P on track for their fifth straight positive week.
Energy shares were the day's biggest advancers, with the group up 2.1%. Hess Corp.(HES) jumped 5.3% while Marathon Oil Corp. (MRO) was up 4.5%. Chevron Corp. (CVX) added 3.3%.
Financial stocks were also strong performers, with the sector ending up 0.9%. Among specific stocks, Goldman Sachs Group Inc.(GS) rose 2.3% while JPMorgan Chase & Co. (JPM) was up 1.6%.
What's driving the market?
Congress on Wednesday provided final approval of the tax bill, leaving only President Donald Trump to sign the bill into law. Morgan Stanley recently warned that the official passage of the bill could represent a near-term top for market (http://www.marketwatch.com/story/heres-why-the-stock-market-could-peak-the-day-trump-signs-the-tax-cut-bill-2017-12-18).
Read:Tax cuts may deliver caffeine rush to economy, but jolt of adrenaline might not last long (http://www.marketwatch.com/story/tax-cuts-may-deliver-caffeine-rush-to-economy-but-jolt-of-adrenaline-might-not-last-long-2017-12-20)
Among the bill's many features, it includes a reduction in the corporate tax rate from 35% to 21%, which is expected to give U.S. companies a boost and speed up economic growth.
Read: 10 things you need to know about the new tax law (http://www.marketwatch.com/story/10-things-you-need-to-know-about-the-new-tax-law-2017-12-20)
What are strategists saying?
"The tax bill will help the bottom line of a lot of companies, but when we talk to companies, what we hear is that it is top-line growth they want to see," said Francis Gannon, co-chief investment officer at Royce Funds.
A company's bottom line, or profitability, can be boosted by lower tax rates or cost-cutting. However, revenue--the top line--requires higher demand to grow. Some analysts have questioned (http://www.marketwatch.com/story/why-the-disney-deal-suggests-the-tax-bill-may-mean-little-for-the-economy-2017-12-14) whether the tax bill will do much to boost demand or hiring.
See:Here's what the companies that make up the Dow industrials think about the tax bill (http://www.marketwatch.com/story/heres-what-the-companies-that-make-up-the-dow-industrials-think-about-the-tax-bill-2017-12-21)
"We don't see a recession or any kind of crisis on the horizon, but we're moving into a more normalized rate environment, and our thought process is that things are getting increasingly risky; this is a moment to be selective."
Also see:The Dow is on track to do something it hasn't done since 1959 (http://www.marketwatch.com/story/the-dow-is-on-track-to-do-something-it-hasnt-done-since-1959-2017-12-21)
What's the latest economic data?
The U.S. economy's pace of growth in the third quarter (http://www.marketwatch.com/story/third-quarter-gdp-revised-down-slightly-to-32-rate-2017-12-21) was lowered slightly to a 3.2% annual rate from 3.3% under the government's final revision to gross domestic product. Economists were expecting GDP to be unrevised. The economy expanded at a 3.1% rate in the second quarter.
Separately, initial jobless claims rose a higher-than-expected 20,000 in the latest week, though they remain at historically low levels (http://www.marketwatch.com/story/jobless-claims-jump-by-most-since-early-september-2017-12-21).
On the upside, the Philadelphia Fed's Manufacturing Business Outlook Survey jumped to a reading of 26.2 in December (http://www.marketwatch.com/story/philly-fed-index-shows-accelerating-factory-momentum-in-december-2017-12-21) from 22.7. The mean estimate of analysts was for a reading of 21.8.
See:MarketWatch's economic calendar (http://www.marketwatch.com/economy-politics/calendars/economic)
Which stocks are in focus?
Biogen Inc.(BIIB) fell 3.3% after the company put out a negative update (http://www.marketwatch.com/story/biogen-shares-drop-4-on-negative-update-for-alzheimers-disease-drug-2017-12-21-8912414) for its Alzheimer's disease drug.
Paychex Inc.(PAYX) reported second-quarter revenue that topped forecasts (http://www.marketwatch.com/story/paychexs-stock-falls-after-downbeat-profit-outlook-offsets-revenue-beat-2017-12-21), although it also gave a profit outlook that was below expectations. Shares fell 0.8%.
Read:Nike earnings: North America business may be starting to gain speed (http://www.marketwatch.com/story/nike-earnings-north-america-business-starting-to-just-do-it-again-2017-12-19)
Apple Inc.(AAPL) shares rose 0.4%. The tech giant on Wednesday admitted it slows down older iPhones (http://www.marketwatch.com/story/apple-admits-slowing-down-older-iphones-to-prevent-unexpected-shutdowns-2017-12-20) to prevent unexpected shutdowns.
Aeterna Zentaris Inc. (AEZS.T) soared 35% after the biotech firm late Wednesday said the U.S. Food and Drug Administration had approved the company's Macrilen product for diagnosis of adult growth hormone deficiency.
Long Island Iced Tea Corp.(LTEA) said it would change its name (http://www.marketwatch.com/story/long-island-iced-tea-soars-after-saying-it-will-change-its-focus-to-blockchain-2017-12-21) to Long Blockchain Corp. Shares soared 183% on extremely heavy volume; nearly 15 million shares exchanged hands, compared with its 30-day average of less than 275,000. The company is just the latest example (http://www.marketwatch.com/story/heres-one-thing-the-bitcoin-frenzy-has-in-common-with-the-dot-com-bubble-2017-11-02) of a stock seeing massive gains after adding a cryptocurrency-related term to its name.
What are other markets doing?
Asian stocks closed mixed, while European stocks (http://www.marketwatch.com/story/european-stocks-drop-as-us-tax-optimism-fades-2017-12-21) mostly traded lower (http://www.marketwatch.com/story/european-stocks-drop-as-us-tax-optimism-fades-2017-12-21).
Oil rose 0.3% while gold was essentially unchanged. The dollar index was flat around 93.307.
Bitcoin futures on the CME were down 10% at $15,270.
(END) Dow Jones Newswires
December 21, 2017 16:29 ET (21:29 GMT)