Goldman Sachs Upgrades Google
On Wednesday, Google Inc. (GOOGL, +5.99% GOOGL, +5.99%) was upgraded by Goldman Sachs from neutral to buy. In addition, analyst Heather Bellini added the search engine giant to the Conviction List of Goldman Sachs which is the investment bank’s top stock picks. Bellini also raised her price target on the Google stock from $680 to $800 which is a 30% increase on Goldman Sachs’ previous price target. To put it into perspective, the average price target among more than 40 analysts polled by FactSet is $766.48 a share. The main reason for the recent upgrade by Bellini is an increase in monetization in YouTube and mobile search. Also, recent comments from Ruth Porat, the Chief Financial Officer of Google, regarding tightening spending in the company, contributed to the positive sentiment regarding the future of Google. According to Bellini, should the technology giant be successful in maintaining a tighter financial focus, margins are likely to improve which in turn will drive the stock over the next few quarters. In pre-market trade, Google shares rose 4.5 percent putting the technology giant on track to open at around $640.41 a share. Interestingly, the shares of Google have increased by 12 percent over the last 3 months, while the S&P 500 index (SPX) has declined by 11% over the same period. All eyes will now be on Google’s development after the company recently announced their reorganization into Alphabet, the tech giant’s new umbrella company.
In U.S. trading on Wednesday, stocks traded higher, picking up steam in the final hour of the trading session. Added to this, the main indices were on track to record their biggest gains of the year, finally breaking a 6-day losing streak. At the close of the trading session, the S&P 500 index (SPX) advanced 2.4%, or 45 points, to 1,913. The gains were led by the health-care and technology sectors while all of the index’s ten main sectors traded higher. Also on the upside was the tech heavy Nasdaq Composite index (COMP) which rose 2.6%, or 115 points, to 4,621. Following the upward trend was the Dow Jones Industrial Average (DJIA) which advanced 4%, or 619.07 points, to 16,285.51. All the 30 components of the blue chip index traded higher and gains were led by Apple Inc. (AAPL, +4.58%) as well as Merck & Co. Inc. (MRK, +5.75%). In addition, the Russell 2000 index was also up 1.3%, or 14 points, to 1,118.
In currency trading on Wednesday, the U.S. dollar (USD) trimmed gains. The greenback however remained supported after positive economic data out of the U.S. was released regarding capital goods orders. This prompted positive sentiment regarding the strength of the economy as well as expectations for a rate hike by the Federal Reserve. Data showed that in the month of July, core capital goods orders rose by 2.2 percent. This marked the biggest increase since June 2014. In addition, total durable goods orders increased in July by 2.0%. This beat expectations for a decline of 0.4%.The USD/JPY traded at 119.14, up 0.16% while the EUR/USD traded at 1.1425, down 0.78%. Against the currencies in Britain, Switzerland and Australia, the U.S. dollar traded higher with the GBP/USD down 0.82% to 1.5560, the USD/CHF up 0.60% to 0.9450 while the AUD/USD was down 0.18% and trading at 0.7118. Also, the U.S. dollar index was at 94.56, up 0.66%.
In early Asian trading on Thursday, crude oil prices traded higher. This increase came in response to the recent policy easing moves by China which boosted demand. WTI crude oil for delivery in October traded at $39.14 a barrel, up 1.40%, on the New York Mercantile Exchange. Investors have now shifted their attention to the weekly oil rig report which will be released by Baker Hughes (NYSE:BHI) on Friday. Last week, the number of rigs drilling for oil in the U.S. increased to 674, up by two. This marked the 5th straight weekly gain. Also, on Wednesday, the EIA (Energy Information Administration) reported that for the week ending on the 21st of August, crude oil inventories in the U.S. declined by 5.5 million barrels. Meanwhile, Brent crude oil for delivery in October traded at $42.92 a barrel, down 0.66%, or $0.29, on the ICE Futures Exchange in London.