NEW YORK – A gauge of global equity markets jumped to an all-time peak on Wednesday, after the S&P 500 and Nasdaq rallied to fresh records on upbeat corporate results, while the dollar eased a day before the Federal Reserve possibly sets a new course on inflation.
MSCI’s all-country world index surged past the pre-COVID high reached in February as technology stocks jumped after Salesforce.com Inc raised its annual revenue forecast on surging demand for the company’s online business software.
“If you look at the stocks that are actually driving the rally and the companies that everybody is using, it really is a technology-leading society at this point, especially with COVID,” JJ Kinahan, chief market strategist at TD Ameritrade in Chicago, said.
Salesforce shares soared 26.0%, their biggest single-day gain since the day the company went public in 2004. Salesforce is slated to join the blue-chip Dow Jones Industrial Average index on Aug. 31.
Adding to the upbeat mood was an analysis of early-stage data from Moderna’s experimental COVID-19 vaccine that showed the vaccine induced immune responses in older adults that were similar to those for younger participants.
The S&P 500 and the Nasdaq have hit daily record closing highs since Friday, driven by demand for tech-focused stocks, government stimulus and record-low interest rates.
Better-than-expected economic data in Europe has lifted analysts’ expectations for earnings, driving regional bourses higher, too. Benchmark indexes in Frankfurt, Paris and London closed up 0.98%, 0.80% and 0.14%, respectively.
The likelihood of a COVID-19 vaccine’s being introduced in early 2021 combined with very low interest rates and an outlook that rates stay low for longer are driving equities higher, said Sam Stovall, chief investment strategist at CFRA in New York.
“Until we really start to see a worry that interest rates are likely to start to move higher, I still see growth in general, tech and consumer discretionary in particular, holding up very well,” he said.
The MSCI index, a gauge of equity performance in 49 countries, rose 0.91% to 584.16, passing its previous record of 581.02.
Apple Inc, Microsoft Corp, Amazon.com, Alphabet Inc’s Google and Facebook Inc account for 12.3% of the benchmark’s weighting.
Europe’s broad FTSEurofirst 300 index closed up 0.80%, while on Wall Street the Dow Jones Industrial Average rose 0.3%, the S&P 500 gained 1.02%, and the Nasdaq Composite added 1.73%.
Investors are focused on whether Federal Reserve Chairman Jerome Powell will hint at shifting the Fed’s inflation target to an average when he addresses the U.S. central bank’s policy framework review at the Jackson Hole symposium on Thursday.
Investors are betting that when he speaks, Powell will create expectations of more inflation, said Jim Vogel, interest rate strategist for FHN Financial.
The dollar index, which tracks the greenback’s value against a basket of currencies, fell 0.105%.
Earlier, the index hit a session high of 93.37 after data showed that U.S. durable goods orders increased more than expected in July.
The euro fell 0.03% to $1.1829.
The 10-year U.S. Treasury note was essentially unchanged in price, yielding 0.6916%.
Euro zone bonds were flat, with safe-haven Bund yields rising a smidgen after enduring their biggest daily losses since May on Tuesday as better German economic data and trade dented hunger for government debt.
Oil prices traded little changed, pressured by worries about the demand outlook during the coronavirus pandemic but buoyed as U.S. producers shut output in the Gulf of Mexico ahead of Hurricane Laura.
Producers evacuated 310 offshore facilities and shut 1.56 million barrels per day of crude output, 84% of Gulf of Mexico’s offshore production – near the 90% outage that Hurricane Katrina brought 15 years ago.
Brent crude futures slid 22 cents to settle at $45.64 a barrel. U.S. crude futures settled up 4 cents at $43.39 a barrel. Both benchmarks settled at five-month highs on Tuesday.
Gold jumped more than 1% as the dollar slipped. U.S. gold futures settled up 1.5% at $1,952.50 an ounce.