U.S. Stocks Finish Trading Higher -- WSJ

12/22/17 02:47 AM EST
By Michael Wursthorn and Riva Gold 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (December 22, 2017).

   -- U.S. stocks move higher 
 
   -- Shares of banks and energy firms lead S&P 500 
 
   -- Utility stocks fall 

Shares of banks and energy firms rose Thursday to help major indexes snap a two-day streak of declines.

Recent pledges from several companies -- including banks and telecommunications firms -- to share the benefits of Republicans' tax cuts with their employees helped investors overcome concerns around how much of the tax bill had already been priced into the market this year, money managers said. The S&P 500 is up 20% in 2017, with gains partly driven by the expectations of lower taxes.

"Corporate America is feeling flush," said Charlie Smith, chief investment officer of Fort Pitt Capital Group. Instead of using the tax cuts to pay more dividends or repurchase shares, some companies are promising to pay their employees more or invest in big projects, he added. "This could mark a sea change in corporate behavior versus what we've seen the last 10 years."

Energy shares also rose as U.S. oil prices settled at their second-highest level of the year. The gains helped offset declines among shares of technology firms late in the session, which caused indexes to pull back from their intraday highs, and utilities.

The Dow Jones Industrial Average climbed 55.64 points, or 0.2%, to 24782.29, while the S&P 500 rose 5.32 points, or 0.2%, to 2684.57. The Nasdaq Composite added 4.40 points, or less than 0.1%, to 6965.36.

Wells Fargo & Co. and Fifth Third Bancorp said Wednesday they would raise their minimum wage to $15 an hour, while AT&T and Comcast promised to pay a $1,000 bonus to most of their U.S. workers.

Wells Fargo's stock added $1.47, or 2.4%, to $61.61, while Fifth Third rose 42 cents, or 1.4%, to 30.93. AT&T gained 33 cents, or 0.9%, to 38.88, and Comcast shares rose 1.43, or 3.6%, to 40.81.

Banks were also getting a boost from a multiday surge in U.S. government bond yields. The yield on the 10-year U.S. Treasury note edged down to 2.483% from 2.497% on Wednesday, when it hit its highest level since March. Yields rise as prices fall.

Gains among Wells Fargo and other banks pushed the KBW Nasdaq Bank index of large U.S. lenders 1.2% higher.

Meanwhile, energy stocks in the S&P 500 rose 2.1%, as crude oil gained 0.5%, to $58.36 a barrel.

Chevron added 3.93, or 3.3%, to 124.82, contributing roughly 27 points to the Dow's gain. Exxon Mobil added 98 cents, or 1.2%, to 83.85.

With the tax bill nearly complete, some analysts and investors say they are concerned that any resulting lift to corporate profits and the economy could spur the Federal Reserve to quicken the pace of interest-rate increases.

U.S. output grew at a 3.2% annual rate in the third quarter, the economy's best quarter since the first three months of 2015, the Commerce Department said Thursday.

"It could give corporates more clarity and a one-year jump in earnings growth, but any pickup may be offset by tighter [monetary] policy," said Zahra Ward-Murphy, equity strategist at Absolute Strategy Research.

Investors were also following lawmakers' year-end talks over a bill to keep the government funded, analysts said.

Elsewhere, the Stoxx Europe 600 rose 0.6% after two consecutive sessions of losses. In Asia, South Korea's Kospi fell 1.7% after shares of Samsung Electronics slid. The Shanghai Composite Index rose 0.4%, while the Hang Seng gained 0.5%.

Corrections & Amplifications The Dow Jones Industrial Average closed at 24782. An earlier version of this article incorrectly stated the index closed at 23782.

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

 

(END) Dow Jones Newswires

December 22, 2017 02:47 ET (07:47 GMT)

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