By Wallace Witkowski, MarketWatch , Ryan Vlastelica
All of S&P 500's 11 sectors higher on the day but broad
averages off intraday bests
U.S. stocks rose on Tuesday, with major indexes adding to their
string of records even as concerns remained about the market's
valuation.
Wall Street was off its highs of the session as midday hit, but
the day's gains were broad, with all 11 of the S&P 500's
primary sectors higher. Energy shares were leading gainers. And the
Dow got a particular boost from Home Depot Inc. and Wal-Mart Stores
Inc., which rallied on the back of their quarterly results.
The Dow Jones Industrial Average rose 0.5%, or 111 points, to
20,735. The S&P 500 index rose 0.6% to 2,364, a gain of 13
points. The Nasdaq Composite Index added 21 points, or 0.4%, to
5,860.
All three hit all-time intraday highs, continuing a recent
streak. The Dow is on track for its eighth straight daily advance,
while both the S&P and the Nasdaq have gained in nine of the
past 10 sessions. However, the S&P did pull back from its early
advance, having risen as much as 0.6% earlier in the day.
While every S&P 500 sector was higher, the rally was led by
real-estate stocks, up 1.2%, and utilities, up 0.9%, with the
heaver-weighted energy sector up 0.8% on crude-oil gains, and
consumer staples up 0.7%.
The market has been in a pronounced uptrend since the election
of Donald Trump in November. Investors are hoping that the policies
he is expected to pursue, including tax cuts and deregulation, will
accelerate economic expansion and lift corporate profits. Trump's
recent suggestions that policies would be unveiled soon have
spurred recent buying, although few details have been
forthcoming.
Karyn Cavanaugh, senior market strategist at Voya Financial,
said in an interview she believes -- with some minor pullbacks --
stock market gains can continue for a while.
"Those waiting for the other shoe to drop can be waiting for a
long time," she said. Cavanaugh said that while a lot of Trump's
promises may be baked into current prices, so many different
variables are in play with changes to tax policy, trade, and
deregulation, that there is still room left to run.
"Economic data is coming in on the upside, global growth is
accelerating, there's an increase in M&A, and optimism is
higher, so the good outweighs the bad until we get anything that
changes that scenario," Cavanaugh said, adding that while
valuations may be above historic highs, compared with bonds they
are still relatively cheap.
With stock valuations stretched
(http://www.marketwatch.com/story/by-one-measure-stock-valuations-are-at-their-highest-level-since-2004-2017-02-17)
by many metrics, some investors are concerned that the market could
be vulnerable in the event the policies disappoint in their
magnitude or structure.
"The rally is getting long in the tooth, and once the euphoria
wears off we will need to know when we'll get policies and how they
will impact corporate profits," said Katrina Lamb, head of
investment strategy and research at MV Financial. "If you think
there are still double-digit gains left to be had, that seems
optimistic. A lot of what we've seen lately seems to be people who
didn't buy into the rally at first and are coming in now in
something of a 'pain trade.'"
Read:How Trump's stock market ranks in his first 30 days in
office
(http://www.marketwatch.com/story/how-president-trumps-stock-market-performance-in-his-first-30-days-ranks-2017-02-17)
Economic docket: In the latest economic data, Markit's read on
manufacturing fell in February
(http://www.marketwatch.com/story/momentum-in-us-manufacturing-services-slows-in-february-markit-2017-02-21),
as did the firm's services gauge.
Data preview:'Soft' side of economy soars under Trump. But
here's the 'hard' truth
(%e2%80%98Soft%e2%80%99%20side%20of%20economy%20soars%20under%20Trump.%20But%20here%e2%80%99s%20the%20%e2%80%98hard%e2%80%99%20truth)
(http://projects.marketwatch.com/2017/trump-today-signup/)
Federal Reserve officials should also draw some attention.
Philadelphia Fed President Patrick Harker, who spoke at the Wharton
School of the University of Pennsylvania, commented that the U.S.
needs to approach higher education differently and suggested
student debt reform
(http://www.marketwatch.com/story/feds-harker-says-us-can-learn-from-australia-on-student-debt-2017-02-21),
pointing to income-linked repayment plans that are in use in
Australia.
Regarding a potential hike in U.S. interest rates, Harker said
in a Friday interview for Market News International that he "would
not take March off the table at this point." That view sent
Treasury yields and the dollar higher in Asian trading Tuesday.
Stocks to watch: Retailers are in the spotlight, with shares of
Home Depot Inc. (HD) up 1% after the company reported
better-than-expected results, upping its dividend and setting a $15
billion buyback.
Wal-Mart Stores Inc.(WMT) was up 3.1% after posting earnings
that beat forecasts and guidance that was in line with its
forecast. The retailer also raised its dividend 2% to $2.04
(http://www.marketwatch.com/story/wal-mart-raises-dividend-2-to-204-2017-02-21).
Verizon Communications Inc.(VZ) and Yahoo Inc.(YHOO) are
expected to cut their merger price by as much as $350 million, The
Wall Street Journal reported. Verizon rose 0.4% while Yahoo added
0.8%.
Apple Inc.(AAPL), the largest U.S. company by market cap, rose
0.6% and hit an intraday record after Morgan Stanley raised its
price target
(http://www.marketwatch.com/story/apples-stock-set-for-record-high-open-after-morgan-stanley-boost-price-target-2017-02-21)
on the company, citing optimism over China sales.
U.S.-listed shares of HSBC Holdings PLC(HSBA.LN) fell 5.7%. The
Asia-focused bank said its net loss widened to $4.23 billion
(http://www.marketwatch.com/story/hsbc-loss-widens-to-423b-plans-further-buyback-2017-02-21)
in the fourth quarter from $1.33 billion in the year-ago
period.
U.S.-listed shares of Unilever PLC(ULVR.LN) tumbled 7.7% and
Kraft-Heinz Co.(KHC) dropped 3.3% after Heinz on Sunday dropped its
$143 billion offer
(http://www.marketwatch.com/story/kraft-heinz-withdraws-bid-for-unilever-2017-02-19)
for the food rival just two days after making public a bid to
combine the two companies. Meanwhile, shares of Mondelez
International Inc.(MDLZ) rallied 5%.
Other markets: Asian markets traded mixed
(http://www.marketwatch.com/story/china-hong-kong-stocks-get-off-to-fast-start-on-slow-trading-day-2017-02-19),
with the Nikkei 225 index closing up 0.7% and the Hong Kong Hang
Seng Index dropping 0.8%. European stocks finished higher across
the board
(http://www.marketwatch.com/story/european-stocks-rise-as-manufacturing-activity-perks-up-2017-02-21)
after data showed a better-than-expected reading on preliminary
manufacturing data.
The ICE Dollar Index
(http://www.marketwatch.com/story/dollar-rises-after-fed-comments-euro-weakens-2017-02-2)
was higher, with the dollar gaining against both the euro and the
British pound . Crude-oil futures
(http://www.marketwatch.com/story/oil-prices-rise-as-investors-increase-bullish-bets-on-prices-2017-02-21)
settled up 1.1% at $54.33 a barrel, while gold prices
(http://www.marketwatch.com/story/gold-knocked-lower-by-rising-dollar-as-rising-rate-commentary-picks-up-2017-02-21)
settled down 20 cents at $1,238.90 an ounce.
Read:Why the 'next leg in the oil bull market' is coming soon
(http://www.marketwatch.com/story/why-the-next-leg-in-the-oil-bull-market-could-come-soon-2017-02-20)
--Barbara Kollmeyer in Madrid contributed to this article
(END) Dow Jones Newswires
February 21, 2017 14:59 ET (19:59 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.