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Stocks

Wall Street closes at all-time peak for 5th day in a row

Wall Street flies into uncharted territory as searing rally lifts market

PUBLISHED : Thursday, 16 February, 2017, 7:15am
UPDATED : Thursday, 16 February, 2017, 7:15am

Wall Street pushed further into record-high territory on Wednesday, with the S&P 500 notching a seven-session winning streak, helped by a round of robust economic data and ongoing optimism that President Donald Trump will cut corporate taxes.

Bigger-than-expected rises in retail sales and consumer prices in January reinforced confidence that the economy is growing at a solid pace following the strongest quarterly corporate earnings growth in over two years.

US economy leaps higher, setting stage for Fed raising rates

In a meeting with top executives from US retail companies, Trump said he would lower taxes substantially and simplify the tax code, echoing a vow he made last week and on the campaign trail.

Optimism that lower taxes and corporate deregulation will expand the economy pushed the three major indexes to all-time highs. The S&P 500 recorded its fifth straight record close and its longest non-stop winning streak since September 2013, even as some investors worried that Trump so far has provided no substantial details of his tax plan.

Federal Reserve Chair Janet Yellen, in testimony before the House Financial Services Committee, stood by the stance she took on Tuesday that the US central bank was on track to raise interest rates at an upcoming policy meeting.

“A year ago, if Janet Yellen had come out with the statement she made, the market would have freaked out because the fundamentals were very soft,” said Brad McMillan, chief investment officer at Commonwealth Financial Network. “Now, if the Fed raises rates it’s not going to shake the world because people are confident enough about the fundamentals.”

The Dow Jones Industrial Average rose 0.52 per cent to end at 20,611.86. The S&P 500 gained 0.50 per cent to 2,349.25 and the Nasdaq Composite added 0.64 per cent to 5,819.44.

Fourth-quarter earnings for S&P 500 companies have risen about 7.2 per cent, the strongest expansion since the third quarter of 2014. Analysts on average expect S&P 500 earnings for the first quarter to rise 10.7 per cent.

The health care index was the top gainer, up 1.17 per cent.

Financial stocks, which benefit from higher rates, rose 0.74 per cent. The utilities and real estate sectors, both of which do worse in high-rate environments, fell 0.39 per cent and 0.30 per cent respectively.

Procter & Gamble jumped 3.71 per cent to a two-year high, giving the biggest boost to the Dow and the S&P, after Trian Fund disclosed a stake, which could pressure the company to slice costs and slow-growing divisions.

Shares of Southwest, United Continental, American Airlines and Delta rose between 2 and 4 per cent after Warren Buffett’s Berkshire Hathaway reported investments topping US$2.1 billion in each of the carriers.

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