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The US stock market ended trading strongly higher on major indices amid falling Treasury yields and demand for defensive stocks of consumer goods, utilities and pharmaceuticals.
Shares of Salesforce (CRM) +3.34%, Merck (MRK) +3.18% and Nike (NKE) helped the Dow Jones index add 0.64%. Autodesk (ADSK) +8.43% and Factset Research (FDS) +8% led the S&P 500 broad market benchmark, which rose 0.95%.
And the results of the day in the main indicator of securities of the technology sector Nasdaq +1.62% were headed by Datadog (DDOG), which became 10% more expensive by the end of the trading session. In Big Tech, a return in demand was seen in Amazon (AMZN) +3.20%, Microsoft (MSFT) +2.26% and Apple (AAPL) +2.16%.
On Wednesday we wrote about expectations of recession risks by banks such as Citigroup and Goldman Sachs, and at the same time emphasized the “decisiveness” of the Swiss UBS, which fundamentally did not want or simply did not see signs of an impending recession. On Thursday, the Swiss still gave up and changed their minds. At the moment, analysts at a credit institution from Zurich estimate the probability of a recession at 69%.
JPMorgan inspired Dow Jones
But the market is technically ready for a rollback, in connection with which it was looking for positive reasons for growth. And oddly enough I found it. And he did it in the most unexpected place.
Chief Strategist JPMorgan pleased investors with his assumption that the US economy as a whole will avoid recession, and the stock market will be able not only to recover any losses in the second half of the year, but also to renew its maximum values.
It was this favorable forecast that was welcomed by the market and contributed to the positive results of the trading session on June 23rd. Correctly! It is unsuitable for such an authoritative bank to intimidate representatives of the investment business, already frightened by various recessions and inflations. All for shares.
Weak oil does not give chances to oilmen
Against the background of another weakness in oil prices, shares of the energy sector became the worst on the market for another day. Quotations of West Texas WTI fell to $105 per barrel, while the North Sea benchmark Brent was worth just above $110 at the close of the main trading session.
In this regard, the oil giant Chevron (CVX) became the vice-leader in terms of capitalization drop in the Dow Jones index, whose shares updated a two-week low and reached $ 142 – the levels of the last days of February this year.
And in the top five in the S&P 500, there are two representatives of the best sector in the first half of 2022 at once. With a fall of 7.62%, Valero Energy (VLO) occupies third place, and oilfield service Schlumberger (SLB) closes the top five outsiders with a result of -6.77%.
Focus on Occidental Petroleum
Literally a beacon of hope against the backdrop of negative performance in oil stocks looks like a positive close on Occidental Petroleum (OXY), whose shares added 0.56%. This looks especially indicative against the background of a total decline in securities of the entire sector. Moreover, the wave of falls is in a decent range of three to six percent.
The culprit behind the bullish joy of investors was Warren Buffett’s Berkshire Hathaway, which announced to the US Securities and Exchange Commission about its additional purchases of OXY securities.
Berkshire’s current long position in the California oilman has increased to 152.7 million shares of common stock, and the average purchase of another stake of 9.55 million shares cost the Oracle of Omaha $55-$56 per share. It only remains to add that Occidental Petroleum (OXY) is one of the best stocks for the current year at the moment. Since the beginning of 2022, its capitalization has increased by 80%. Here’s what it looks like on a chart:
Berkshire Hathaway’s shareholding in Occidental now exceeds 16%. In this regard, there was talk and speculation on the market about Buffett’s potential intention to completely buy out the oil company, the total market value of which is about $ 54 billion, which is quite within the power of such a financial giant as BH.
In this regard, investors come to mind the acquisition of the Burlington Northern Santa Fe railway company in 2009, before which the financial conglomerate bought about 22% from the market. But there are also opposite precedents, when large shares did not affect the desire to buy out the company completely. For example, in such industry giants as American Express (AXP) and Kraft Heinz (KHC), Berkshire owns a good fifth of the entire business, but there is no talk of further intentions.
Time will tell whether the next grand deal will take place, but for now we state that the US stock market is entering the finish line of this week with positive results. The Dow Jones is already 2.6% higher than the previous Friday’s close, the S&P 500 is up 3.3% and the Nasdaq Composite is up 4%.