U.S. Stocks Rise to New Highs, Buoyed by Telecoms and Financial Firms

12/12/17 06:03 PM EST
By Michael Wursthorn and David Hodari 
   -- U.S. stocks rise, led by financials, telecoms 
 
   -- European shares move higher, while Asia slides 
 
   -- Investors look to central banks 

The Dow Jones Industrial Average and the S&P 500 clinched new records Tuesday, buoyed by shares of banks and other financial firms.

Bank stocks have been rallying in recent weeks as Republicans in the House and Senate work to complete a sweeping tax overhaul this year. Rising government bond yields, which tend to boost bank profits, gave shares of financial firms an added lift ahead of the Federal Reserve's expected interest-rate increase on Wednesday.

"Everything right now comes down to policy," said Eric Wiegand, senior portfolio manager U.S. Bank Private Wealth Management. "We'll be watching what [Fed Chairwoman Janet] Yellen might say at her last press conference and any insights going forward. The other fixation in Washington is on the tax bill," he added, saying that he and other investors are "looking for any signs of negotiations advancing."

The Dow industrials rose 118.77 points, or 0.5%, to 24504.80, while the S&P 500 added 4.12 points, or 0.2%, to 2664.11. It was the Dow's 67th record close this year, and the S&P 500's 60th. The Nasdaq Composite fell 12.76 points, or 0.2%, to 6862.32, snapping a four-session winning streak.

Goldman Sachs Group gained $7.55, or 3%, to $257.68, adding about 52 points to the index and making it the biggest contributor to the Dow's point gain. JPMorgan Chase & Co. rose 1.23, or 1.2%, to 106.85.

The yield on the benchmark 10-year U.S. Treasury note rose for a fourth consecutive session to 2.403%, from 2.387% on Monday. Yields rise as bond prices fall.

Shares of financial stocks in the S&P 500 are up 8.9% so far this quarter, with much of its gains coming as Republicans have made progress on their tax proposal to make it the best-performing sector of the broad index so far.

A mix of corporate news also pushed telecommunications and media firms higher. The gains among financial and telecom stocks helped both the Dow and the S&P 500 overcome declines in shares of technology and energy companies.

Verizon continued to get a boost after it said Monday it struck a deal to show NFL football games on its mobile network, as well as Yahoo and its other platforms. Verizon shares climbed 1.35, or 2.6%, to 53.19.

Shares of Comcast advanced 1.07, or 2.8%, to 39.51 after the cable and programming firm said it was no longer pursuing an acquisition of media and entertainment assets from 21st Century Fox.

Meanwhile, Walt Disney's talks to acquire assets from 21st Century Fox continued and a deal could be announced as soon this week, The Wall Street Journal reported. Shares of 21st Century Fox, which shares common ownership with Wall Street Journal parent News Corp, rose 44 cents, or 1.3%, to 34.10, while Disney gained 60 cents, or 0.6%, to 107.43.

Boeing, a big contributor to the Dow's gains this year, gained 6.78, or 2.4%, to 289.94 after the aerospace giant late Monday said it would boost its quarterly dividend by 20% and raise its buyback authorization to $18 billion.

Tuesday marked the start of the Federal Open Market Committee's two-day meeting, with the panel's interest-rate decision due Wednesday. Data from CME Group showed investors were betting on a 100% probability that the Fed will announce a rate increase.

Investors shouldn't expect many surprises in the months ahead from the central bank, said Mark Richards, a global multiasset strategist at J.P. Morgan Asset & Wealth Management. December's meeting will be the last for multiple FOMC members, and despite an impending change at the helm in January, "it doesn't feel like a new Fed chair will seek to alter the policy path materially, so we expect [the current guidance of three increases] to be maintained for a good few months."

Elsewhere, the Stoxx Europe 600 rose 0.7%, while most indexes in Asia ended the session lower.

Hong Kong's Hang Seng Index fell 0.6%, dragged lower by heavyweight Tencent Holdings. South Korea's Kospi slipped 0.4%, while Japan's Nikkei closed 0.3% lower. The Shanghai Composite lost 1.2%.

Write to Michael Wursthorn at Michael.Wursthorn@wsj.com and David Hodari at David.Hodari@dowjones.com

 

(END) Dow Jones Newswires

December 12, 2017 18:03 ET (23:03 GMT)

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