Stocks soar to records
NEW YORK» The major U.S. stock indexes closed Friday at record highs, with the S&P 500 ending above 3,000 points for the first time. The market was driven higher by technology, consumer discretionary and industrial company stocks, which more than offset the drop in drugmakers.
Investors continued to remain focused on the Federal Reserve. The Fed is expected to cut its benchmark interest rate this month for the first time in more than a decade to help counter slowing economic growth caused by various trade disputes. Investors have bet heavily that the Fed is moving that direction, sending stock and bond yields higher in the last two weeks.
The Dow Jones industrial average closed up 243.95 points, or 0.9 percent, to 27,332.03. The S&P 500 rose 13.86 points, or 0.5 percent, to 3,013.77. The Nasdaq composite index rose 48.10 points, or 0.6 percent, to 8,244.14. All three indexes closed at record highs.
Health care stocks took some of the heaviest losses. Eli Lilly, Merck and Pfizer all fell more than 1 percent. Pharmaceutical companies also fell Thursday after the White House withdrew a plan to overhaul the rebates that drugmakers pay insurers and distributors. Investors now expect that drugmakers may come under renewed pressure to lower prices.
Separately, another drugmaker, Johnson & Johnson, fell 4.1 percent. Bloomberg News reported that the company, a Dow component, is under criminal investigation for possibly lying to the public about the cancer risks found in its ever-popular baby powder.
Industrial companies did well. DuPont rose 2.9 percent, Emerson Electric added 2.4 percent and Illinois Tool Works climbed 3.1 percent. There was positive economic data out of Europe on Friday. Industrial production rose by 0.9 percent in May, much more than the 0.2 percent gain that economists had been expecting.
Ford rose 2.9 percent after announcing it would team up with Volkswagen to share costs on self-driving and electric vehicles.
Illumina — a genetics toolmaking company — plunged 16.1 percent after the company announced it was lowering its fullyear forecast.
Bond yields have been moving higher for several days, a sign that investors have become more confident that the U.S. economy will continue to produce growth, at least for the next several months.
Federal Reserve Chairman Jerome Powell told Congress on Wednesday that many Fed officials believe a weakening global economy and rising trade tension have strengthened the case for an interest rate cut.
The yield on the benchmark U.S. 10-year Treasury note was 2.12 percent compared with the multiyear low of 1.95 percent the bond hit only 10 days ago.
“In our view, the Fed will cut (interest rates by a quarter of a percentage point) since market expectations are near 90 percent,” Tom Di Galoma, with Seaport Global, wrote in a note to clients.