Wall Street hits record high on energy, tech boost
Gains in technology and energy shares pushed Wall Street’s three main indexes to record highs on Monday, as hopes of a U.S.-China trade deal and an improving domestic economy boosted risk appetite.Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., November 4, 2019.
Washington and Beijing said on Friday they had made progress in defusing an economically damaging trade war, with U.S. officials indicating that a deal could be signed this month.
Adding to the optimism, Commerce Secretary Wilbur Ross said on Sunday licenses for U.S. companies to sell components to China’s Huawei Technologies Co Ltd would come “very shortly”.
Eight of the 11 major S&P 500 sectors were higher, with the energy shares .SPNY gaining the most on the back of higher oil prices. The sector along with technology shares .SPLRCT provided the biggest boost to the benchmark index.
Helping the tech sector was a rally in trade-sensitive chip stocks, which also drove the Philadelphia Semiconductor index .SOX to a record high.
“Signing these deals take time. All that is needed for markets to be happy right now is for an agreement to be announced,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.
“The earnings period was certainly enough to support current stock prices. It wasn’t good enough to lead stocks higher but not bad enough for them to go any lower,” he added.
The third-quarter earnings season has been fairly upbeat, with 76% of the 360 S&P 500 companies that have reported results so far beating profit expectations, according to Refinitiv data.
Last week’s interest rate cut by the Federal Reserve, growing expectations of a trade deal and a better-than-feared October jobs growth report have been the main catalysts of the recent rally.
A report on Monday, however, showed new orders for U.S.-made goods fell more than expected in September and business spending on equipment was slightly weaker than initially thought, suggesting that manufacturing remains soft amid the ongoing trade war.
At 11:21 a.m. ET the Dow Jones Industrial Average .DJI was up 136.74 points, or 0.50%, at 27,484.10, the S&P 500 .SPX was up 14.22 points, or 0.46%, at 3,081.13 and the Nasdaq Composite .IXIC was up 42.34 points, or 0.50%, at 8,428.74.
The biggest drag on the blue-chip Dow Jones index was a 2.6% drop in shares of McDonald’s Corp (MCD.N) after the fast-food giant dismissed Chief Executive Steve Easterbrook over a recent consensual relationship with an employee, which the board determined violated company policy.
Under Armour Inc (UAA.N) fell 15.4% as it lowered its full-year revenue forecast for a second straight time, a day after it confirmed a federal probe related to its accounting practices.
In M&A activity, medical device maker Stryker Corp (SYK.N) said it would buy smaller rival Wright Medical Group (WMGI.O) for about $4 billion in cash. Shares in Wright Medical surged 32%, while Stryker fell 3.9%.
The S&P index recorded 59 new 52-week highs and no new lows, while the Nasdaq recorded 110 new highs and 21 new lows.