U.S. stocks closed higher for a fourth session Tuesday with the S&P 500 notching an intraday record on the back of optimism over U.S.-China trade talks against the backdrop of a healthy economy and solid corporate earnings. The gains come on the day stocks tie a record for the longest bull market in history.
How did the main benchmarks fare?
The Dow Jones Industrial Average
rose 63.60 points, or 0.3%, to end at 25,822.29. The S&P 500 index
advanced 5.91 points, or 0.2%, to 2,862.96 after touching an intraday high of 2,873.23. The finish left the S&P 500 just 0.3% off the record close of 2,872.87 notched on Jan. 26. The Nasdaq Composite Index
climbed 38.17 points, or 0.5%, to 7,859.17.
The Nasdaq is around 0.9% from its record close, while the Dow is 3% below its own.
The Dow Jones Transportation Average
gained 0.7% to 11,436.36, after carving out an intraday peak at 11,475.40, marking the gauge’s first record high since Jan. 16, while the small-capitalization Russell 2000 index
rallied 1.1% to 1,718.05 after setting an intraday record of 1,722.29.
What drove the market?
With the second-quarter earnings season essentially over and no economic data on tap, investors are turning their attention to news from the Federal Reserve. The minutes from the central bank’s latest meeting will be released on Wednesday, and on Friday, Fed Chairman Jerome Powell will give a speech at the Kansas City Fed’s annual summer retreat in Jackson Hole, Wyo.
Both the minutes and the speech will be scoured for any insight into what the Fed sees as potential problem spots for the economy. In particular, market participants will be looking to hear Powell’s thoughts on trade policy and whether the currency crisis in Turkey could spread to other emerging markets or regions—as well as for any clues into the Fed’s policy plan on interest rates.
The speech could take on some political overtones this year, after President Donald Trump again criticized Powell and the Fed. Trump said he was “not thrilled” with the Fed chairman, who he had appointed to replace Janet Yellen, and that he expected “more help” from the central bank. Reuters reported that Trump said he would continue criticizing the Fed should it continue to raise short-term interest rates, which the central bank has indicated it will do at a steady clip.
This isn’t the first time Trump has called out the Fed for raising rates. When he did so in July, Powell stressed that the Fed operated independently of political considerations.
Separately, investors are continuing to monitor trade relations between the U.S. and its major trading partners, with talks between the U.S. and China set to resume on Wednesday. While market participants are optimistic that progress could be made in the talks—potentially averting a trade war, which most analysts said would be a massive headwind for global economic growth—few expect the issue to be resolved.
On Monday, Trump told Reuters that he has “no time frame” for ending the trade dispute, and that he didn’t “expect much” from the talks. His administration is also moving forward with tariffs that cover $200 billion in Chinese goods.
Meanwhile, the bull market in stocks on Wednesday is due to become the longest bull market on record, from the March 9, 2009 low of the financial crisis which many consider the birth date of the current bull.
What were analysts saying?
Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, said the S&P 500 setting an intraday high is a sign that confidence in the market has been restored but worries over U.S.-China trade tensions are likely to contribute to mounting volatility until these issues are resolved.
“I think that this is optimism on at least some partial resolution of the trade negotiations as investors are expecting progress [on that front],” said Kate Warne, investment strategist at Edward Jones, referring to the market’s recent rise.
“If we reach new highs that’s great but I think it would be a reflection of the positive underlying fundamentals of very positive earnings growth and modest interest rates,” Warne said.
What stocks were in focus?
Toll Brothers Inc.
jumped 14% after it reported its third-quarter results and gave a full-year sales outlook.
sank 7.1% after it reported fourth-quarter revenue that missed expectations, although its adjusted profits topped forecasts by a penny a share.
gained 5.7%. The medical device company posted first-quarter earnings and revenue that beat expectations. It also raised its organic full-year revenue outlook.
shares rose 1.7% after the retailer reported adjusted second-quarter earnings that beat expectations, along with revenue that was ahead of forecasts. It also raised its full-year adjusted profit view.
reported adjusted first-quarter earnings that beat expectations but its shares fell 6.6%.
Shares of discount brokers slumped after a report that JPMorgan Chase & Co.
was planning to launch a new digital brokerage service that comes with free trades. TD Ameritrade Holding Corp.’s stock
tumbled 7.1%, Charles Schwab Corp.
shed 2.4% and E-Trade Financial Corp.’s stock
slid 4.4%. J.P. Morgan’s stock, meanwhile, gained 0.6%.
What were other markets doing?
European stocks ended mostly higher with the exception of the U.K.’s FTSE
and Asian markets all rose except for Australian stocks.
gained for a fourth straight day, while gold
settled higher and the ICE U.S. Dollar Index
—Ryan Vlastelica contributed to this report
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