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Nasdaq ends at 14-year high as global tensions are seen receding

  • Stocks surged, with the Dow up 175 points and the Nasdaq reaching a 14-year high, on the back of increasing homebuilder confidence and hopes for receding tensions between Russia and Ukraine.
  • Also driving some of the gains was Dollar General's $8.95B counterbid for Family Dollar, which topped an offer made three weeks ago by Dollar Tree and marked the latest potential tie-up in a year that has seen a pickup in corporate deal-making.
  • "With the momentum built up over the last week, conversations are likely to turn towards when, not if, it can tackle the 17,000 level again,” IG analyst Alastair McCaig says.
  • Participation continued on the low side, with fewer than 600M shares changing hands at the NYSE.
  • In addition to boosting equities, today's events weighed on safe-haven assets, as benchmark the 10-year note spent the day in a steady retreat and pushing its yield up 5 bps to 2.39%.
Comments (3)
  • 1GreatCFA
    , contributor
    Comments (1150) | Send Message
     
    C'mon stock market. Take your nose dive already. You cannot go up indefinitely. Surely by now many people who have absolutely no business investing in equities are in with both feet...this MUST imply that markets are poised for a nose dive. My own personal feeling is that two quarters not one quarter after QE is stopped...look out belooowwww.
    18 Aug 2014, 10:33 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    Get down on your knees and beg the stock market to take its nose dive. Otherwise why should it listen to you?

     

    Dude, you seriously are a CFA?
    18 Aug 2014, 11:35 PM Reply Like
  • King Rat
    , contributor
    Comments (856) | Send Message
     
    Macro Investor, my thoughts exactly. Maybe Canadians take their own CFA exam.

     

    Is the market expensive? The market has crashed at lower PE levels and risen 50% at higher PE levels. Earnings could grow 10%/year for the next 10 years and stocks rise at 5%/year (before dividends) and voila, a market PE under 12.5, "undervalued" by 15%.

     

    Rising interest rates does not necessarily mean bad for stocks.
    Rising interest rates is good relief for insurance companies and corporate pension plans. Don't forget social security. In fact, the stock market often does well in periods of rising interest rates.

     

    That is not to say that a 20% drop would be unthinkable but 20% drops from time to time are common. If the market does drop by 20% that will only make my dividends reinvest in more shares. I would actually welcome that any day.
    19 Aug 2014, 03:32 AM Reply Like
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