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Monday 19 February 2018

US stock indexes end strong week with tiny gains

US stock indexes marked their fourth consecutive gain on Friday (AP)
US stock indexes marked their fourth consecutive gain on Friday (AP)

US stock indexes marked their fourth consecutive gain on Friday, an upbeat finish for a week that got off to a turbulent start as investors fretted about Britain's vote to leave the European Union.

In the days since the two-day market tumble ended on Tuesday, the US stock market came close to regaining all the ground lost since the vote last week. It ended the week up 3%, its biggest weekly gain since November.

The main stock indexes in Europe posted even bigger gains this week, with British stocks recouping all their losses along the way.

At the same time, demand for US Treasurys surged this week, driving bond prices sharply higher. That pulled down the yield on the 10-year Treasury note to 1.44% Friday, close to its record low.

Investors also bid up the price of gold, another traditional safe haven.

"Clearly there is still an underlying sense of nervousness," said JJ Kinahan, chief strategist at TD Ameritrade. "No reasonable economic theory would be telling you to buy bonds with this kind of yield. It's more 'I don't care if I don't make yield, I want my money back'."

The Dow Jones industrial average gained 19.38 points, or 0.1%, to 17,949.37. The Standard & Poor's 500 index added 4.09 points, or 0.2%, to 2,102.95. The Nasdaq composite rose 19.89 points, or 0.4%, to 4,862.57.

The major stock indexes in Europe got a boost Friday as traders anticipated a co-ordinated central bank response to soothe volatility in the wake of Britain's vote to leave the European Union.

All told, Britain's FTSE 100 rose 1.1 % Friday, while Germany's DAX gained 1 % . France's CAC 40 added 0.9 % .

In the US, consumer-focused companies rose more than the rest of the market Friday. Netflix climbed 5.19 dollars, or 5.7%, to 96.67 dollars. Harley-Davidson led the gainers in the S&P 500 index, climbing 8.95 dollars, or 19.8%, to 54.25 dollars.

Financial and utilities stocks were the biggest laggard.

Several carmakers reported growth in sales for June, giving a boost to shares in several auto-related companies. Ford Motor, which posted a 6% increase in sales for the month, rose 15 cents, or 1.2%, to 12.72 dollars. General Motors added 59 cents, or 2.1%, to 28.89 dollars, even though the company posted a 2% decline in sales due a large drop in rental sales. Auto supplier BorgWarner also got a lift, rising 77 cents, or 2.6%, to 30.29 dollars.

Investors flocked to stocks in the face of narrowing choices for investments amid low or negative interest rates on many bonds.

Expectations of more financial stimulus from central banks, which lowers returns on fixed-income investments like bonds, have pushed investors into buying stocks. Returns on many government bonds around the world - particularly in Europe and Japan - are negative.


Press Association

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