Banks, travel stocks rise as Dow approaches 20,000
Symbolic threshold remains just out of reach.
Big gains for banks and companies focused on travel helped propel U.S. stock indexes to record levels on Tuesday. The Dow Jones industrial average moved closer than ever to 20,000, but the symbolic threshold remained just out of reach.
Banks once again led the way Tuesday as bond yields and interest rates bounced higher. Strong earnings from cruise line operator Carnival and gains for travel website TripAdvisor led consumer companies higher. Household goods makers fell after Cheerios maker General Mills cut its sales projections for the year, and energy companies fell for the second day in a row. That hadn’t happened three weeks. The Dow came within 13 points of the 20,000 mark around 10 a.m. Trading remained light as the Christmas holiday approached.
Stocks have soared since the presidential election and the Dow has risen almost 1,000 points in under a month, and some investors think that means stocks won’t move much in 2017.
“We’re at fair value,” said Scott Wren, a senior global equity strategist at the Wells Fargo Investment Institute. “This is not going to be a big return year for the stock market.”
The Dow gained 91.56 points, or 0.4 percent, to a record close at 19,974.62. The Standard & Poor’s 500 index picked up 8.23 points, or 0.4 percent, to 2,270.76. The Nasdaq composite also finished at a record as it added 26.50 points, or 0.5 percent, to 5,483.94. The Russell 2000 index of small-company stocks jumped 12.27 points, or 0.9 percent, to 1,383.96.
Bond prices reversed course and fell after climbing higher Monday. The yield on the 10-year Treasury note rose to 2.56 percent from 2.54 percent. Bond yields have risen sharply of late, and that’s good for banks because higher bond yields are linked to higher interest rates, which let them make more money from lending. Regions Financial rose 30 cents, or 2.1 percent, to $14.58 and Citigroup gained $1.14, or 1.9 percent, to $60.80.
Cruise line operator Carnival reported profit and sales that were stronger than expected. The company said bookings for trips in 2017 are stronger than they were at this time last year. It said both ticket sales and prices are up. Carnival stock rose $1.17, or 2.3 percent, to $52.49 and competitor Royal Caribbean gained $2.85, or 3.4 percent, to $85.40.
Travel website operator TripAdvisor jumped $2.34, or 5 percent, to $48.79 after it said it will start adding some Expedia brands to its instant hotel booking platform.
Other consumer companies also gained ground. Used car dealership Carmax jumped $3.80, or 6.1 percent, to $66.16 after a strong earnings report.
Consumer-focused companies have outperformed the market since the November election as investors expect them to benefit from a possible pickup in economic growth. But the sector has lagged the market in 2016 after a large gain a year ago.