Monday, February 13, 2017
U.S. stocks extended gains on Monday, with major indexes notching a third day of record-breaking session as financial and industrials stocks paved the way to higher ground.
The Dow Jones Industrial Average DJIA, +0.72% gained 151 points, or 0.8%, to 20,421. The S&P 500 SPX, +0.54% advanced 12 points, or 0.6%, to 2,328. The Nasdaq Composite Index COMP, +0.54% climbed 32 points, or 0.6%, to 5,766.
All three indexes were trading at records, after closing at all-time highs on Friday.
“Even though we have social unrest and building geopolitical tensions, the market refuses to fall in any meaningful fashion, which means there remains a very strong underlying bid in the market,” said Adam Sarhan, chief executive officer of 50 Park Investments. “This is due to a confluence of a few factors, including the earnings recession being over, a very strong bull market, and the hope for future prosperity under the pro-growth policies of the new administration.”
Gains have been pronounced since Donald Trump’s presidential election victory in November, and the latest move higher was pegged to the president suggesting last week that he would announce a tax plan in the near term. While he didn’t reveal details, in the campaign he advocated for massive corporate tax cuts.
Analysts said investors are also relieved that Trump has taken a softer stance toward China and Japan, key trading partners.
“Today’s advance is propelled by rising bank shares, the result of the possibility of higher interest rates which will permit the financials to be more profitable,” said Kent Engelke, chief economic strategist at Capitol Securities Management Inc.
Banks have been the biggest beneficiaries of the postelection rally, with investors betting they will benefit from both deregulation and an environment with rising interest rates. Industrial stocks have gained on hopes that a massive infrastructure deal, which Trump also touted during the campaign, would increase demand for the sector.
Goldman Sachs Group Inc. GS, +1.49% gained 1.7% while J.P. Morgan Chase & Co.JPM, +1.32% added 1.4% while heavy machinery maker Caterpillar Inc.CAT, +2.31% rose 2.5% as one of the biggest advancers on the Dow.
A meeting between Trump and Canadian Prime Minister Justin Trudeau had no significant impact on the U.S. market. The Canadian benchmark GSPTSE, +0.16% is up 3%, extending gains from last week.
That the two leaders did not surprise the markets is a good thing, according to Colin Cieszynski, chief market strategist at CMC Markets.
“The two leaders have significant policy differences in areas like climate change and immigration, but trade between the U.S. and Canada is so huge it’s really important that they focus on business and not get caught up in other areas. The less drama the better from a market perspective,” he said.
Shares in Verizon Communications Inc. VZ, -0.86% fell 0.8% as the nation’s biggest wireless carrier starts selling unlimited data plans again. It’s the first time Verizon has offered such a service since 2011, signaling that intense competition is forcing the telecom to change its strategy.
Other markets: European stocks SXXP, +0.75% rose and Asian markets closed higher. Oil CLH7, -1.78% fell sharply while gold futures GCH7, -0.67% retreated and the ICE U.S. Dollar Index DXY, -0.01% edged up 0.1%.
–Victor Reklaitis contributed to this report.