S&P 500 Aims for Longest Streak of Record Highs in 20 Years

10/05/17 03:58 PM EDT
By Michael Wursthorn and Riva Gold 
   -- Major U.S. stock indexes head for fresh records 
 
   -- CBOE Volatility Index hovering near all-time low 
 
   -- Shares of financial firms, technology companies surge 

The S&P 500 was on course for its longest streak of record closes in 20 years, as shares of financial firms pushed major indexes higher.

The broad index added 0.5% Thursday after hitting its fifth straight high a day earlier. The Dow Jones Industrial Average gained 98 points, or 0.4%, to 22760, while the Nasdaq Composite added 0.7%.

Strong corporate earnings have buoyed stocks for months, and a recent run of economic data reflecting stability and growth in the U.S. have added to stocks' momentum, analysts said. The three major indexes each have hit more than 40 records this year, even as some investors remain wary of persistently low volatility and lofty valuations.

"We've pared back on U.S. exposure and made a tilt overseas, but not a dramatic one," said Doug Cohen, managing director of portfolio management at Athena Capital Advisors. "The reality is this is one of the more expensive markets in the last 100 years, but equities are still the most attractive asset class."

A measure of expected stock swings, the CBOE Volatility Index, was recently down 2.9% at 9.35, near its all-time closing low of 9.31 set in December 1993.

Shares of financial firms in the S&P 500 added 1.1% as bond yields rose. Higher yields tend to portend better profits for lenders.

Citigroup rose 2.1%, while Bank of America added nearly 2%. Goldman Sachs climbed 2.2%, contributing roughly 37 points to the Dow industrials' gain.

The yield on the benchmark 10-year Treasury note rose to 2.352%, compared with 2.332% on Wednesday. Yields rise as bond prices fall.

Data released Thursday showed applications for new unemployment benefits fell in late September, the latest indicator to portray a strong U.S. economy even though recent hurricanes continued to disrupt economic activity in several regions. Earlier in the week, data showed manufacturing activity in the U.S. reached a 13-year high last month , while service-sector activity rose to its highest level since 2005.

Still, the major summer storms are expected to affect Friday's monthly employment report, the Labor Department warned last week.

"Investors understand data will be flipping over the next month due to the impact of hurricanes," said Dave Donabedian, chief investment officer at CIBC Atlantic Trust Private Wealth Management. "But I still think there will be rising confidence in the idea that this economic expansion is not over."

Technology companies, big contributors to this year's rally, continued to support indexes Thursday. Netflix surged nearly 5% after the company said it plans to raise prices for its video-streaming services in an effort to raise revenue amid rising content costs. Apple gained more than 1% after the company released a software update that it said addresses some cellular-connectivity issues that have affected its newest smartwatch. Apple suffered its worst month of the year in September after falling 6%.

The Stoxx Europe 600 rose 0.2% after snapping a nine-session winning streak on Wednesday, its longest in more than two years.

Spanish stocks showed signs of recovering after Catalonia set a course toward declaring its secession from Spain as soon as Monday. Spain's IBEX 35 index added 2.5% after sliding nearly 3% Wednesday, its biggest percentage decline in more than a year.

Investors also eyed minutes of the European Central Bank's September meeting released Thursday, which showed policy makers discussed how to scale back stimulus and argued over reasons for the euro's climb this year.

The euro was recently down 0.5% at $1.1705, while the British pound fell 1% to $1.3113. The WSJ Dollar Index, which tracks the U.S. currency against a basket of 16 others, rose 0.5%.

Write to Michael Wursthorn at Michael.Wursthorn@wsj.com and Riva Gold at riva.gold@wsj.com

 

(END) Dow Jones Newswires

October 05, 2017 15:58 ET (19:58 GMT)

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