Dow Jones Industrial Average Pushes Higher; S&P Notches Record Close

Stocks More Expensive Than Ever: Is Buffett to Blame?

Josh Selway
May 5, 2017 at 4:27 PM
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The Dow Jones Industrial Average (DJIA) staged a second-half comeback, shrugging off initial weakness from IBM stock. Not only did April's nonfarm payrolls report top expectations, but the unemployment rate edged to its lowest point in nearly 10 years. The Nasdaq Composite (COMP) and S&P 500 Index (SPX) also moved higher on the jobs data, with each notching record closing highs. Further, all three indexes managed weekly wins, despite uncertainty surrounding this weekend's French election.

Continue reading for more on today's market, including:

  • Stocks are more expensive than ever -- and the Warren Buffett Effect could be to blame.  
  • Analyst: This could be "bad news" for Valeant stock.
  • How call options give bullish traders an advantage. 
  • Plus, Shake Shack has found a floor; why Buffett cut IBM; and short interest just peaked on Pandora. 

The Dow Jones Industrial Average (DJIA - 21,006.94) ended at a session high, closing up 55.5 points, or 0.3%. Of the Dow's 30 components, 22 closed higher, led by DuPont's 3.1% gain. IBM shares paced the losers with their 2.5% setback, while the second-biggest loser was Nike, which closed down 1%. The Dow closed the week with a 0.3% gain. 

The S&P 500 Index (SPX - 2,399.29). added 9.8 points, or 0.4%, for a weekly win of 0.6%. The Nasdaq Composite (COMP - 6,100.76) finished the day 25.4 points, or 0.4%, higher, putting its weekly advance at 0.9%. 

The CBOE Volatility Index (VIX - 10.57) edged up 0.1 point, or 1.1%. The market's "fear gauge" lost 3% for the week. 

Closing Indexes Summary May 5
NYSE and Nasdaq Stats May 5


5 Items on Our Radar Today:
  1. The latest polls out of France show Centrist French presidential candidate Emmanuel Macron widening his lead over far-right candidate Marine Le Pen ahead of this weekend's election. Several polls had Macron receiving over 60% of the vote, with Le Pen in the high 30s. (Reuters)
  2. Google's YouTube has announced it's working on several shows featuring prominent celebrities, such as Ellen DeGeneres, Kevin Hart, and Katy Perry. The shows are suspected to be ad-supported programs, instead of falling under a subscription-based model. (USA Today)
  3. Analysts: Shake Shack stock has found a floor. 
  4. The main reason Buffett pared his IBM position.
  5. Short interest on Pandora stock has peaked ahead of earnings. 

Corporate Earnings May 5
Unusual Options Activity May 5
Data courtesy of Trade-Alert

Commodities

Oil prices rebounded some today, but still closed the week with heavy losses. June-dated crude futures picked up 70 cents, or 1.5%, in today's trading, to close at $46.22 per barrel. This still puts the oil contract 6.3% lower for the week, though. 

Gold extended its losing streak to three sessions, due to this morning's strong jobs data and a stronger greenback. June-dated gold futures shed $1.70, or 0.1%, to close at $1,226.90 per ounce. For the week, gold fell 3.3% -- its steepest weekly drop since November.

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