Bank stocks boost S&P, Dow
NEW YORK — The S&P 500 and the Dow industrials registered record closing highs on Tuesday with a boost from bank stocks as investors eyed a potential cut in US corporate taxes and continued economic growth after strong inflation data.
US producer prices rose in November as gasoline prices surged and the cost of other goods increased, leading to the largest annual gain in nearly six years.
The data, which came a day ahead of US Federal Reserve’s widely expected hike in interest rates could assuage concerns among some Fed officials over persistently low inflation.
Investors were also hoping US Republicans would be able to complete final legislation for a tax overhaul that is expected to slash corporate tax rates.
“It’s mostly optimism on taxes being close to the finish line and stronger global economic data,” said RJ Grant, head of trading at Keefe, Bruyette & Woods in New York.
The Dow Jones Industrial Average rose 118.77 points, or 0.49%, to 24,504.80, the S&P 500 gained 4.12 points, or 0.15%, to 2,664.11 and the Nasdaq Composite dropped 12.76 points, or 0.19%, to 6,862.32.
The financial sector was the biggest driver with a one-percent gain, followed by the health care sector, up 0.40%.
The telecom index was the biggest percentage gainer with a 2.80% jump.
“As investors become more comfortable (that) the economic recovery appears to be expanding, they’re starting to dip their toes into the value sectors like industrials, financials and energy that need earnings growth to expand,” said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.
Goldman Sachs was the biggest boost for the Dow with a three percent gain, followed by Boeing, which rose 2.40% after it announced a 20% dividend hike and an $18-billion share buyback authorization.
Declines in technology heavyweights, including Apple and Facebook, dragged on the Nasdaq.
The Fed was widely expected to raise its benchmark interest rate for third time this year on Wednesday.
“The market is anticipating one to two rate hikes and the Fed is looking at three to four (in 2018). There is going to be some reconciliation of those opinions, and so far in the last few years, the market has been more right than the Fed has,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.
Declining issues outnumbered advancing ones on the NYSE by a 1.19 to one; on Nasdaq, a 1.26-to-1 ratio favored decliners.
About 6.50 billion shares changed hands in US exchanges, in line with the 6.52 billion daily average over the last 20 sessions. —