Stocks go on climb, breaking records

Dow, S&P at highs as fretting wanes

In this Friday, Nov. 13, 2015, file photo, the American flag flies above the Wall Street entrance to the New York Stock Exchange. Stocks are opening solidly higher on Wall Street, Tuesday, July 12, 2016, putting the market on track for another milestone.
In this Friday, Nov. 13, 2015, file photo, the American flag flies above the Wall Street entrance to the New York Stock Exchange. Stocks are opening solidly higher on Wall Street, Tuesday, July 12, 2016, putting the market on track for another milestone.

NEW YORK -- The U.S. stock market passed another milestone Tuesday as the Dow Jones industrial average closed at a record high.

The Dow rose 120.74 points, or 0.7 percent, to 18,347.67. That is 35 points higher than its previous closing high on May 19 last year.

On Monday, the broader Standard & Poor's 500, a widely used benchmark for index funds, also reached a record-high close, also surpassing a peak set in May 2015.

The Dow and S&P 500 are each up 5.3 percent for 2016, having roared back after a big drop in January and early February. The S&P has soared 17.7 percent since reaching a low of the year of 1,829 on Feb. 11.

The stock market has been building momentum, said Matt Maley, an equity strategist in New York at Miller Tabak & Co LLC.

"Investors are thinking they have to jump on board before the train leaves the station," Maley said.

The S&P 500 gained 14.98 points, or 0.7 percent, to end Tuesday at 2,152.14. The Nasdaq composite rose 34.18 points, or 0.7 percent, to 5,022.82.

The Nasdaq is still lagging behind the other two main U.S. stock market indexes. The index, which is heavily weighted with technology and biotech stocks, erased its losses for the year Tuesday.

The biggest gainers included energy companies, which have been benefiting from a recovery in the price of oil, materials companies and banks.

Shares of financial companies, which have lagged the market this year, have been rising in recent days as long-term interest rates move higher in the bond market. Higher rates mean banks can make more money from lending. Shares of Citigroup rose 93 cents, or 2.7 percent, to $43.44.

"We're seeing a continuation of the strong reaction to the jobs report on Friday," said Peter Jankovskis, who helps oversee $1.9 billion as co-chief investment officer of Lisle, Ill.-based OakBrook Investments. "There's also general relief from the political developments overseas, particularly the United Kingdom and Japan. There's optimism right now that some of these problems that have been worrying investors have been resolved, and optimism around earnings could be playing into today's market as well."

Despite recent increases, however, bond yields remain near historic lows, a worrisome sign to many analysts. Just last week the yield on the 10-year Treasury note touched an all-time low. Bond yields tend to fall when demand for bonds rises, which can indicate that investors are seeking safety.

"I wish we can be celebrating, but it's a little disconcerting," said Rob Bartenstein, chief executive officer of Kestra Private Wealth Services. "You've got government bonds at historical lows and equity markets at historical highs. That's not something you see at the same time. ... I feel underinvested, but I'm not willing to chase stocks."

Sectors that investors tend to favor when they're nervous, including utilities, phone companies and makers of consumer staples, all fell as investors moved money out of lower-risk assets. Bond prices also fell sharply, sending yields higher.

Alcoa kicked off the second-quarter earnings season on a positive note. The 128-year-old aluminum producer reported earnings after the close Monday that exceeded analysts' estimates after profit from its car and jet parts businesses offset declines in prices for the metal. The stock jumped 55 cents, or 5.4 percent, to close Tuesday at $10.69.

Analysts predict that the combined second-quarter profits of the S&P 500 companies will drop 5.7 percent, which would make it the fifth-straight quarterly decline, the longest streak since 2009.

Shares of Seagate Technology surged $5.26, or 21.8 percent, to close Tuesday at $29.35 after forecasting strong sales. It also announced that it will cut 6,500 jobs, about 14 percent of its total.

Benchmark U.S. crude rose $2.04 to close at $46.80 a barrel in New York. Brent crude, a standard for international oil prices, rose $2.22 to $48.47 a barrel in London. In other energy trading in New York, wholesale gasoline rose 5 cents to $1.43 a gallon, heating oil rose 5 cents to $1.46 a gallon and natural gas rose 3 cents to $2.73 per 1,000 cubic feet.

In Japan, the Nikkei 225 index jumped 2.5 percent, a day after soaring 4 percent. Prime Minister Shinzo Abe has promised new government spending to help jolt Asia's second-biggest economy back to life now that his Liberal Democratic Party has won in parliamentary elections. Investors are betting that he'll keep flooding the market with money by expanding bond purchases.

Elsewhere in Asia, Korea's Kospi edged up 0.1 percent, and Hong Kong's Hang Seng added 1.7 percent. In Europe, France's CAC 40 rose 1.6 percent and Germany's DAX added 1.3 percent. Britain's FTSE 100 was flat.

Shares of Nintendo jumped 12.7 percent in Tokyo, fueled by the craze for Pokemon Go, a smartphone game that's become the top grossing app in the iPhone store less than a week after its release in the United States, Australia and New Zealand.

U.S. government bond prices fell. The yield on the 10-year Treasury note rose to 1.50 percent from 1.43 percent. The yield plunged last week as low as 1.32 percent, an all-time low, according to Tradeweb.

The price of gold fell $21.30 to $1,335.30, silver fell 13 cents to $20.17 an ounce and copper rose 7 cents to $2.21 a pound.

Information for this article was contributed by Bernard Condon of The Associated Press; and by Joseph Ciolli, Aleksandra Gjorgievska and Jeremy Herron of Bloomberg News.

A Section on 07/13/2016

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