Stocks rally sends Dow, S&P climbing to all-time records

On heels of Trump victory, investors develop appetite for risk, bullish bets

NEW YORK — The Dow Jones industrial average and Standard & Poor’s 500 indexes soared Wednesday to their biggest gains since the presidential election and set all-time highs.

Investors bought stocks that do well in times of faster economic growth, such as technology and industrial companies, but they also snapped up stocks that pay large dividends.

The Dow jumped 297.84 points, or 1.5 percent, to 19,549.62. The S&P 500 index rose 29.12 points, or 1.3 percent, to 2,241.35. The Nasdaq composite recovered from an early loss to rise 60.76 points, or 1.1 percent, to 5,393.76. That was about 5 points short of its all-time high.

The Russell 2000 index of small-company stocks also recovered from an early loss and set its own record as it gained 11.84 points, or 0.9 percent, to 1,364.51.

“Appetite for riskier assets is strong amid investors, and nothing is stopping them from beefing up their bullish bets,” said Naeem Aslam, chief market analyst in London at Think Markets U.K. “The major focus is that the biggest economy in the world, the U.S., is going to pick up steam on the back of Trump-economics,” Aslam said.

The stock rally since President-elect Donald Trump defeated Democratic presidential nominee Hillary Clinton is now the biggest for any new president since Ronald Reagan.

“What we didn’t expect was the speed and the magnitude of the ‘Trump Trade,’” Doug Ramsey, chief investment officer at Leuthold Group LLC, wrote in a note published Wednesday. “The consensus hope, which we share, is that tax reform and regulatory roll-back will extend and maybe enliven an economic recovery that’s already long in the tooth.”

Stocks moved steadily higher throughout the day after a mixed open. Phone and real estate companies made the largest gains, but the rally moved into high gear in the afternoon, as shares of airlines, railroads and trucking companies soared.

Investors took the rally in transportation stocks as a sign of optimism about economic growth. Technology and consumer-focused companies also jumped. Biotech drug companies took steep losses after Trump said he

wants to reduce drug prices.

The transportation sector reached an all-time high for the first time in two years. Julian Emanuel, an equity strategist for UBS, said investors were pleased to see that record because they see it as a sign businesses will start spending more, which would bolster economic growth.

“The consumer has really been the engine of the economy,” he said. “The missing piece has been the corporate side, the industrial side.”

U.S. government bond prices rose, sending yields lower. The yield on the 10-year Treasury note fell to 2.34 percent from 2.39 percent. Bond yields have risen sharply since the summer but have slipped in the past few days.

The lower bond yields have helped stocks that are seen as bond substitutes, like real estate investment trusts. Their big dividends are attractive to investors who want income, so when bond yields fall, investors often turn to those stocks. Industrial real

estate company Prologis rose $1.62, or 3.2 percent, to $52.32, and Verizon picked up $1.02, or 2 percent, to $51.38.

AT&T also jumped as a Senate antitrust panel scrutinized its planned $85.4 billion purchase of Time Warner, the parent of HBO. Legislators asked if the deal would improve competition and reduce prices for consumers, as the companies say it will. AT&T gained $1.10, or 2.8 percent, to $40.45, and Time Warner edged up 8 cents to $93.98.

A wide array of companies that stand to benefit from faster economic growth also climbed. Home-improvement retailer Lowe’s rose $3.94, or 5.4 percent, to $76.40, and truck-maker Paccar jumped $3.20, or 5 percent, to $67.63. U.S. Steel added $1.54, or 4.3 percent, to $37.49.

IBM led technology companies higher as it rose $4.44, or 2.8 percent, to $164.79. Hard-drive maker Western Digital climbed $5.30, or 8.3 percent, to $69.15 after it extended a licensing deal with Samsung.

In an interview with Time magazine, which named him Person of the Year, the president-elect said he wants to reduce drug prices. He did not say how his administration plans to do that. Clinton campaigned on reducing drug prices, and drug company stocks had rallied since the election as investors felt that was less likely to happen under Trump.

The Nasdaq biotechnology index tumbled 2.9 percent. Those companies make costly medications and might stand to lose the most under tighter price regulations. Amgen lost $3.92, or 2.7 percent, to $141.19, and Vertex Pharmaceuticals sank $2.80, or 3.6 percent, to $75.32.

Benchmark U.S. crude oil fell $1.16, or 2.3 percent, to $49.77 a barrel in New York. Brent crude, the international standard, slid 93 cents, or 1.7 percent, to $53 a barrel in London. Energy companies traded higher Wednesday, although they rose less than the rest of the market.

Oil surged to a 16-month

high last week after OPEC agreed to trim the group’s output by 1.2 million barrels a day from January to stem a supply glut and buoy prices. OPEC has invited 14 producers from outside the group to a meeting Saturday to discuss the curbs, Secretary-General Mohammad Barkindo said.

“The crude-buying frenzy of last week has abated,” Adam Wise, who helps run a $7 billion oil and natural gas bond and private equity portfolio at John Hancock in Boston, said by telephone. “The market is now digesting the data and attention is shifting to the implementation of the agreement.”

European stock indexes jumped as investors anticipated that the European Central Bank will extend its bond-buying stimulus program today. The stimulus is designed to promote growth and inflation. European stock indexes climbed. Germany’s DAX gained 2 percent, and the FTSE 100 in Britain rose 1.8 percent. The CAC 40 of France picked up 1.4 percent.

The European Central Bank already has spent $1.5 trillion on quantitative easing, a figure that will rise to $1.8 trillion by the end of March.

The dollar fell to 113.85 yen from 114.05 yen. The euro rose to $1.0759 from $1.0715.

In other energy trading, wholesale gasoline prices fell 3 cents to $1.51 per gallon. Heating oil slipped 2 cents to $1.62 a gallon. Natural gas fell 3 cents to $3.60 per 1,000 cubic feet.

Gold rose $7.40 to $1,177.50 an ounce. Silver jumped 47 cents to $17.28 an ounce. Copper dipped 4 cents to $2.64 a pound.

Japan’s benchmark Nikkei 225 rose 0.7 percent, and the South Korean Kospi inched up 0.1 percent. The Hang Seng in Hong Kong gained 0.5 percent.