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US markets end higher amid rate cut hopes

13 Jul 2019 Evaluate

The US markets ended higher on Friday on renewed optimism about the Federal Reserve lowering interest rates as soon as its next meeting later this month. Congressional testimony from Fed Chairman Jerome Powell indicating crosscurrents, such as trade tensions and concerns about global growth, have continued to weigh on the US economic outlook helped spark the resurgence in optimism about a rate cut. Powell's remarks triggered an upward trend on markets that lifted the Dow above the 27,000 level for the first time ever. Though, trading activity was somewhat subdued as traders brace for the unofficial start of earnings season next week. Citigroup (C), Goldman Sachs (GS), Johnson & Johnson (JNJ), JPMorgan (JPM), Wells Fargo (WFC), IBM (IBM), Netflix (NFLX), Microsoft (MSFT), and American Express (AXP) are among the slew of companies due to report their quarterly results.

On the economic front, the Labor Department released a report showing US producer prices unexpectedly edged higher in the month of June. The Labor Department said its producer price index for final demand inched up by 0.1 percent in June, matching the uptick seen in May. Street had expected producer prices to come in unchanged. The modest increase in producer prices came as a steep drop in energy prices was more than offset by continued service price growth. The report said energy prices plunged by 3.1 percent in June after tumbling by 1.0 percent in the previous month, with gas prices plummeting by 5.0 percent. Excluding food and energy prices, however, core producer prices climbed by 0.3 percent in June after rising by 0.2 percent in May. Core prices had been expected to show another 0.2 percent increase. The bigger than expected increase in core prices came as service prices rose by 0.4 percent in June after climbing by 0.3 percent in May.

Dow Jones Industrial Average surged 243.95 points or 0.90 percent to 27332.03, Nasdaq rose 48.10 points or 0.59 percent to 8244.14 and S&P 500 was up by 13.86 points or 0.46 percent to 3013.77.

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