Health care, banks lift Wall Street
WALL STREET’s major indices extended the New Year rally to close at record levels on Tuesday on investor optimism ahead of quarterly earnings reports and hopes for easing tensions with North Korea.
WALL STREET’s major indices extended the New Year rally to close at record levels on Tuesday on investor optimism ahead of quarterly earnings reports and hopes for easing tensions with North Korea.
Defensive S&P sectors — utilities, real estate and telecommunications — were out of favor, while bank stocks were boosted by rising US 10-year Treasury yields. Health care stocks rose with the sector in focus on the second day of an industry conference.
The S&P 500 and Nasdaq registered their sixth closing record highs in a row. The Dow also ended at record levels after it had snapped a three-day run of closing highs in Monday’s session.
Some investors were reassured that North and South Korea held their first talks in more than two years, which Washington described as a good first step in solving the North’s nuclear missile program crisis. Pyongyang said it would not discuss weapons aimed only at the United States.
“The diplomacy taking place between North Korea and South Korea might circumvent some type of military action. Anything that would de- risk the peninsula would be viewed favorably by investors,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
The Dow Jones Industrial Average rose 102.80 points, or 0.41%, to 25,385.80, the S&P 500 gained 3.58 points, or 0.13%, to 2,751.29 and the Nasdaq Composite added 6.19 points, or 0.09%, to 7,163.58.
Profits for S&P 500 companies are expected to rise 11.80% in the fourth quarter, compared with an eight-percent increase a year earlier, according to Thomson Reuters I/B/E/S.
“There will be some noise there with tax adjustments, but the forward- looking comments ought to be pretty positive. Investors are buying into that,” said Bucky Hellwig, senior vice-president at BB&T Wealth Management in Birmingham, Alabama.
S&P’s financial sector ended 0.80% higher after 10- year US Treasury note yields hit a 10-month high after the Bank of Japan said it will trim its purchases of Japanese government bonds.
Interest-rate sensitive utilities and real estate sectors ended one percent lower while the telecommunications sector fell 1.80%.
While investors are hopeful about global economic growth and tax cut-led gains for corporate earnings, they are anxious about whether the tax overhaul could overheat inflation and lead to a sharper-than-expected rise in interest rates.
After a lukewarm December jobs report, signs of a pickup in inflation could come in the monthly consumer price report due on Friday, on the same day that big US banks are set to kick off the fourth- quarter earnings season.
The S& P health care sector closed one percent higher, boosted by a 1.60% rise in Johnson & Johnson, a five percent gain in Gilead and an 8.30% jump in Boston Scientific shares.
Chip stocks dragged on the technology sector, which fell 0.30%. Intel fell 2.50% after Microsoft Corp. said computers with older Intel chips slowed noticeably after it released security patches.
Declining issues outnumbered advancing ones on the NYSE by 1.41 to one; on Nasdaq, a 1.19-to-one ratio favored decliners. —