Stock indexes rally to more record highs, led by tech gains

Another rally on Wall Street powered stock indexes to more records Thursday.

The S&P 500, Dow Jones Industrial Average and Nasdaq composite notched all-time highs, extending the market’s gains after a strong start to the year.

A batch of solid economic data injected more optimism into markets a day after the signing of an initial trade deal between the U.S. and China.

Consumers have been the backbone of economic growth and the government’s December report on retail sales showed that they continued spending at a healthy pace. Encouraging reports on manufacturing, weekly applications for unemployment aid and homebuilders’ confidence also helped lift the market. Investors also weighed a mixed bag of corporate earnings.

The good economic news follows the signing of the “Phase 1” trade deal between the U.S. and China that puts the nations on a clearer path to ending their 18month long trade war. The pact eases some sanctions on China, which has agreed to step up its purchases of U.S. farm products and other goods.

Meanwhile, the Senate approved a new North American trade agreement Thursday that rewrites the rules of commerce with Canada and Mexico.

The trade deals and positive economic data have helped fuel optimism that corporate profits will be strong this year after coming in flat to down for most of 2019, and that’s keeping investors in a buying mood.

“Because we are continuing to see 2-2.5 percent GDP growth in the U.S., because both economic growth and earnings are expected to show gains in both the developed and emerging markets, that will likely lead to better earnings here in the U.S.,” said Sam Stovall, chief investment strategist at CFRA.

The S&P 500 index climbed 27.52 points, or 0.8 percent, to 3,316.81. The index also set all-time highs on Monday and Wednesday.

The Dow rose 267.42 points, or 0.9 percent, to 29,297.64. The Dow closed above 29,000 for the first time on Wednesday. Stovall said it’s possible we could see the Dow hit 30,000 this year.

“Because of expectations that we are probably underestimating economic and earnings growth, as a result that 30,000-level will be seen,” he said.

The Nasdaq gained 98.44 points, or 1.1 percent, to 9,357.13.

Smaller-company stocks fared better than the rest of the market. The Russell 2000 index rose 22.82 points, or 1.4 percent, to 1,705.22.

The market’s record-setting rally has the benchmark S&P 500 on track to close out the week with its second straight weekly gain.

Bond prices fell, sending yields higher. The yield on the 10-year Treasury rose to 1.80 percent from 1.78 percent late Wednesday.

Technology companies were the clear leaders Thursday. Many of the companies stand to benefit from progress in trade relations because they are reliant on China for sales and supplies. Microsoft rose 1.8 percent and Cisco Systems gained 2.2 percent.

A mix of retailers and consumer product makers also made solid gains. Home Depot rose 1.9 percent and Hanesbrands gained 2 percent.

Financial companies, including banks, also rose. Morgan Stanley led the sector after reporting quarterly results that topped Wall Street’s forecasts.

The first heavy week of corporate earnings reports rolled along Thursday with banks mostly finishing their reporting. Investment bank Morgan Stanley climbed 6.6 percent after reporting a surprisingly good jump in fourth-quarter profits on the strength of its trading desks.