Markets Right Now: US stocks move higher; Dow nears record

A broad rally has lifted the S&P 500 and Dow industrials to record highs, with a sharp rebound in crude prices boosting energy shares, while the Nasdaq turned positive for the year. The blue-chips gauge surpassed its previous record of 18,312.39 set on 19 May 2015 and briefly high an intraday high of 18,371.95.

“After three or four quarters of an aggregate earnings decline for S&P 500 companies, due to decimated profits from oil and gas companies and a strong US dollar, earnings may finally begin to bottom and perk up in the second-half of 2016”, analyst Jason Ware, chief investment officer at Utah-based Albion Financial, said Tuesday.

The Dow Jones industrial average climbed 120.74 points, or 0.7 percent, to 18,347.67. That is 35 points higher than its previous closing high set on May 19 past year.

The S&P 500 gained 15 points, or 0.7 percent, to 2,152. The Shanghai Composite Index in mainland China advanced 1.8 percent to 3,049.38 and Australia’s S&P/ASX 200 rose 0.3 percent to 5,353.20. Those losses have since been completely erased.

The Dow and S&P 500 are each up 5.3% for 2016, having roared back following a big drop in January and early February. The S&P has soared 17.7 percent since reaching a low of the year of 1,829 on February 11.

The U.S. dollar hit its highest level in more than two weeks against the yen of 104.92 yen on the global risk appetite and anticipation of more Japanese stimulus. The gains on Tuesday were led by energy companies, materials companies and banks.

“The combination of very low interest rates and modest earnings going forward and supportive central banks and now some indication of fiscal stimulus in Japan – the third largest economy – this is a mix that stock investors can support”, said James Russell, portfolio manager at investment firm Bayle & Gaynor. Citigroup gained 93 cents, or 2.7%, to 43.44 dollars.

Despite recent increases, however, bond yields remain near historic lows, a worrisome sign to many analysts. “While we will credit the market with achieving a balance for 2017 as a significant improvement over the past two years of surplus, we note this scenario also suggests it will be 2018 before we see global inventories trending lower”.

“I wish we can be celebrating, but it’s a little disconcerting”, said Rob Bartenstein, CEO of Kestra Private Wealth Services. “I feel underinvested, but I’m not willing to chase stocks”. Safe-haven stocks like utilities and phone companies also fell. Bond prices also fell sharply, sending yields higher.

Company earnings reports got off to a good start. The stock jumped 48 cents, or 5 percent, to $10.62. Earnings for the all of the S&P 500 is expected to fall compared to the year ago period, but then rise in the next quarter.

Seagate Technology surged $5.18, or 22 percent, to $29.27 after forecasting strong sales.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 11, 2016. Brent crude, a standard for worldwide oil prices, rose 2.22 to 48.47 dollars a barrel in London. In other energy trading in NY, wholesale gasoline rose 5 cents to $1.43 a gallon, heating oil rose 5 cents to $1.46 a gallon and natural gas rose 3 cents to $2.73 per 1,000 cubic feet.

Tokyo’s Nikkei 225 index jumped 2.5 percent, a day after soaring 4 percent.

MSCI’s all-country world equity index was last up 0.09 points, or 0.02 per cent, at 408.48. In Europe, France’s Cac 40 rose 1.6% and Germany’s Dax added 1.3%. Britain’s FTSE 100 was up 0.2 percent to 6,695.74.