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While you were sleeping: Dow climbs to record

While you were sleeping: Dow climbs to record

By Margreet Dietz

July 15 (BusinessDesk) - Wall Street rose, pushing the Dow to a record high, as better-than-expected earnings from Citigroup bolstered optimism about the outlook for corporate profit growth in the world’s largest economy.

In late afternoon trading in New York, the Dow Jones Industrial Average climbed 0.73 percent, the Standard & Poor’s 500 index rose 0.51 percent, while the Nasdaq Composite Index added 0.62 percent. 

Gains in shares of UnitedHealth and Visa, up 2.1 and 2 percent respectively, led the advance in the Dow. The Dow set an intraday record of 17,088.43, before paring some of its earlier gains.

Shares of Citigroup added 3.1 percent following its latest quarterly results, which also helped lift other US bank shares and the mood in general.

“The market has more room to run,” Robert Pavlik, who helps oversee US$4.5 billion as chief market strategist at Banyan Partners in New York, told Bloomberg News. “It’s going to be interesting to watch the amount of strength that it carries day to day.”

Also on Monday, Citigroup and the US Justice Department also announced a US$7 billion agreement to settle an investigation into sales of mortgage-backed securities.

US Treasuries slid, pushing yields on the 10-year bonds 3 basis points higher to 2.55 percent.

Investors will scrutinise US Federal Reserve Chair Janet Yellen’s semi-annual policy testimony to Congress for clues about the timing of the next interest rate increase. Yellen will testify to the Senate Banking Committee on Tuesday, and to the House Financial Services Committee on Wednesday.

The American corporate shopping spree - and tax evasion efforts - continued as AbbVie’s efforts to acquire Dublin-based Shire appeared to gain traction. Four earlier bids were rejected. Shire said it was willing to recommend an offer from AbbVie.

Europe’s Stoxx 600 Index increased 0.9 percent, recovering from last week’s slump as concern eased about a flare-up of the region’s debt crisis in Portugal.

Even so, shares of Portugal’s Banco Espirito Santo slumped 7.5 percent. The troubled bank appointed Vitor Bento as CEO on Sunday.

Elsewhere in Europe, the UK’s FTSE 100 and France’s CAC 40 each rose 0.8 percent, while Germany’s DAX jumped 1.2 percent.

A report showed industrial production in the euro zone shrank 1.1 percent in May from the previous month, which was a smaller decline than economists had expected.

European Central Bank President Mario Draghi on Monday told the European Parliament’s economic and monetary affairs committee that policy makers will keep ECB interest rates at current record-low levels for an extended period.

(BusinessDesk)

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