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Market wrap Feb. 17, 2017: U.S. stocks surge to fresh record highs
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By Fund Library News Wire  | Friday, February 17, 2017


By Mike Keerma

Against a backdrop of climbing inflation and more hawkish signals from the Federal Reserve Board, U.S. stock markets closed at record highs on Friday, extending a streak of record high closes through February. The S&P 500 Composite Index advanced 1.5% on the week, and is now ahead 5.0% year to date, while the Nasdaq Composite Index advanced 1.8% on the week for an 8.5% gain year to date. In Canada, declining copper, gold, and crude oil prices weighed on Toronto’s benchmark S&P/TSX Composite Index on Friday, but the index still gained 0.7% on the week, and is now ahead 3.6% year to date.

Meanwhile, U.S. Treasury bond yields edged down on Friday ahead of the U.S. national President’s Day long weekend, extending their February slide as the core rate of inflation climbed to an annual 2.3% in January. Bond prices faced additional pressure last week following Federal Reserve Chairwoman Janet Yellen’s comments on Tuesday that inflation is no longer “at very low levels,” and that waiting too long for a rate hike would be “unwise.” Fed tea-leaf readers took that as an indication that the Fed is leaving the door open for a potential rate hike in March.

In business news, food conglomerate Kraft Heinz Co. (NASDAQ: KHC) announced a bid to take over Anglo-Dutch consumer products giant Unilever Plc (NYSE: UL) with a US$50 cash/share bid worth about US$143 billion, representing an 18% premium over Unilever’s Thursday closing price. Unilever has rejected the bid, saying it fundamentally undervalues the company and that there is no basis for further discussions. However, as Kraft Heinz is backed by Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK.A) and run by Buffett-favorite Brazilian-based 3G Capital, this is very likely only the opening salvo in the merger bid. Incidentally, Berkshire Hathaway A shares passed a milestone last week, crossing the US$250,000 per share mark, and touching a record high of US$251,610.

In Canada, pipeline major TransCanada Corp. (TSX: TRP) has been on something of a comeback trail since last November as it filed an application last week with the State of Nebraska to continue work on the much-delayed Keystone XL pipeline. TRP’s share price has climbed 33% from a 52-week low of $46.81 set in November, touching a 52-week high of $65.24 in January, and closing the week at $62.22. The company reported a net loss of $358 million ($0.43 per share) in the fourth quarter ended Dec. 31, compared to a net loss of $2.5 billion ($3.47 per share) for the same period in 2015. For the year ended Dec. 31, 2016, net income attributable to common shares was $124 million ($0.16 per share) compared to a net loss of $1.2 billion ($1.75 per share) in 2015.

Check Fund Library’s Market Activity page regularly for active updates on key market indexes and commodities.

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© 2017 by Fund Library. All rights reserved. Reproduction in whole or in part by any means without prior written permission is prohibited.

The foregoing is for general information purposes only and is the opinion of the writer. No guarantee of investment performance is made or implied. It is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice.

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