US Tech Stock Surge

The S&P 500 significantly outperformed the Dow on Friday with the S&P 500 up 0.81% while the Dow managed just 0.14%. Tech stocks were the star performers with Google up 4.8% and Apple up 3.6%. These gains helped bring the Nasdaq 100 up to 6,213 for a gain of 2.91%. The gains were driven largely by earnings releases that beat analyst expectation in most cases. Tesla (TSLA) was a notable underperformer, falling 1.62% on Friday, as the market worries that the company’s ambitious production schedule for the Model 3 will not be achieved.

Despite the general ‘risk-on’ sentiment, the gold price rose on Friday and closed at the high for the day of $1,274. Oil also rose as the prospect of an extension to the OPEC production cuts grows with both Russia and Saudi Arabia seemingly willing to work together to extend the cuts. WTI oil is now trading back above US$54 per barrel for the first time since February.

Bitcoin has surged to a new high, again breaking above US$6,000 and settling just below US$6,200. The meteoric rise in bitcoin has created very divided opinions from people well-known in business. Some people believe it to be a bubble that will eventually burst while others think it is the future and will continue to trade strongly. Recently Warren Buffet responded to a question about bitcoin by stating that it is a ‘real bubble’ and that essentially, he isn’t optimistic about its future.

The US released its first estimate for third quarter GDP which came in significantly above expectations at 3.0% with growth in business inventories and a smaller trade deficit contributing to the growth. The strong number came despite the effects of the hurricanes that hit Texas and Florida which caused a decrease in consumer spending. In addition to the strong 3rd quarter, the 2nd quarter GDP growth was revised upwards from 2.6 to 3.1%. These numbers should give the Federal reserve even more confidence to hike interest rates at its December meeting.

Data Releases:

–    US Personal Spending 11:30pm AEDT

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This article was written by William O’Loughlin – Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via william.oloughlin@rivkin.com.au or by phoning +612 8302 3633.