Wall Street gains again after a wobble
NEW YORK — U.S. stocks brushed aside their first wobble of the year and got back to setting records on Thursday.
Energy stocks led the way after the price of oil touched its highest level since 2014. That helped drive energy stocks in the S&P 500 to a 2 percent gain, the largest among the 11 sectors that make up the index. They’re at their highest level since the end of 2016. Anadarko Petroleum Corp. had one of the biggest gains in the index after jumping $3.09, or 5.6 percent, to $58.50.
The gains for indexes marked a return to calm, after a whiff of nervousness wafted through markets a day earlier as interest rates rose. After rates held steady on Thursday, the Standard & Poor’s 500 index marked its seventh gain in the last eight days.
Optimism about a strengthening global economy and growing corporate profits have helped propel markets even though stocks have become more expensive than they’ve historically been relative to earnings.
The market’s smooth ride upward hit a bump Wednesday when worries rose that a jump in interest rates could derail the ascent. Rates have been ultralow since the recession, a culmination of a decline in bond yields over the last three-plus decades.
“Everyone’s on edge about waiting for what’s to come,” even though central banks have promised to take a slow path toward higher rates, said Marina Severinovsky, a strategist at Schroders.
“There shouldn’t be a fallingoff-the-cliff mentality, but we’re so primed,” she said. “We’re 30 years into this, waiting for the trigger.”
Rates retreated on Thursday after China’s foreign exchange regulator challenged a report that had helped drive up yields, which said China may slow or halt purchases of U.S. Treasurys. A U.S. government report on Thursday also showed that inflation was weaker on the wholesale level last month than economists expected.
The yield on the 10-year Treasury note dipped to 2.53 percent from 2.56 percent late Wednesday. It had climbed as high as 2.59 percent on Wednesday.
The stock market has repeatedly shrugged off concerns through its placid ride to records. Whether investors are worried about a pickup in rates in the future or about how stocks have become more expensive than usual, any dip over the last year has been shallow and short.
That’s rewarded investors who have repeatedly “bought the dip” and seen every wobble in prices as a buying opportunity. The next test for the market may arrive in coming weeks as companies report how much profit they made in the last three months of 2017.
Businesses will need to produce strong growth to justify the gains their stocks have made, and expectations are high that CEOs will unveil encouraging profit forecasts for 2018 after Washington cut their income tax rates.