Markets are kicking off a new trading week back up strong, following a bit of selling off in the last hour of trading Thursday afternoon, which immediately preceded the long 4th of July holiday weekend. Over said weekend, Warren Buffett’s Berkshire Hathaway BRK.B announced it will be purchasing gas transmission assets from natural gas company Dominion Energy D, and Shanghai markets rallied 5.7% to levels not seen since 2018, on newspaper reports about a strong Chinese economy.
Though we’ve seen bullish traders assert themselves in this market routinely, this morning’s bid-up — the Dow +440 points, the Nasdaq +150 and the S&P 500 +50 — still comes as something of a surprise. Last week, all sectors on the S&P 500 rose, with the index now just 7.6% from all-time highs. The Dow is off its record levels 12.6% at this stage, while the Nasdaq riding all-time highs.
The Berkshire deal for Dominion is worth $9.7 billion in assets and debt. It includes 7700 miles in existing natural gas pipelines, storage, and a 25% stake in liquified natural gas (LNG) exports, imports and storage. Berkshire stock is up more than 2% in today’s pre-market, while — somewhat strangely — Dominion has sold off 3.7% thus far today. Typically, the acquirer takes a near-term stock hit while the acquiree bids up toward the acquisition price.
After regular trading gets started, we’ll get a new Markit Services Purchasing Managers Index (PMI) for June, along with a fresh ISM Non-manufacturing report. The ISM read is expected to have surpassed the 50% level last month, following a 45.4% headline reported for May. PMI Services came in at 46.7 for May. Will it cross over the 50-point mark, as well?
But overall this week, we’ll be looking toward Q2 earnings season accelerating a week from now, without much in the way of economic data points to guide expectations. Thus, we’ll be checking the animal spirits currently guiding this bull market as the week progresses; it seems there’s not much to slow the stampede from this vista.
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