US stocks closed mixed on Wednesday, with the Dow Jones Industrial Average the only major ticker able to muster gains – and its longest record-setting period in 30 years.
While both S&P 500 down 0.1% at 2362 and the Nasdaq Composite down 0.1% at 5860 underwhelmed, even a confused batch of Federal Reserve January rate meeting minutes failed to derail speculation of a March rate hike, first suspected a week ago when central bank chair Janet Yellen testified before Congress.
The Dow, which has a smattering of bank stocks in its ranks, ended up 0.2% at 20,775 after hitting a fresh intraday record high of 20,781.59. In fact, both were record numbers. That was the Dow’s ninth session in a row for record highs and its best such period since 1987.
But its gains were thanks to other stocks than banks, which mostly eased, including Goldman Sachs (NYSE:GS) and American Express (NYSE:AXP), while JP Morgan (NYSE:JPM) managed only the narrowest of gains.
The Dow’s top riser was Du Pont (NYSE:DD) up 3.4% at $79.80. DuPont climbed and Dow Chemical (NYSE:DOW) gained 4% to $63.66 following reports that regulators in the European Union are close to approving their $62bn merger. Antitrust officials in the US and elsewhere would still have to approve that deal.
Investors appeared to grow more optimistic about a second deal in the chemicals industry: Monsanto (NYSE:MON) up 0.7% at $111.38, has accepted a $57bn offer from Germany’s Bayer but is also waiting for regulatory approval.
Although Fed minutes talked about officials being broadly in favour of a rate hike “fairly soon”, which was not as definite for March as some had hoped, it was enough to keep the Dow above the losses line on the day.
Meanwhile, the oil sector was depressed and so were its stocks, as oil prices sagged. The West Texas Intermediate was down 1.4% at $53.58.
The S&P Midcap 400 closed down 0.4% at 1742 and led by United Therapeutic (NASDAQ:UTHR), down 12.5% at $147 while the S&P Smallcap 600 ended down 0.4% at 859 and led by Nautilus Group (NYSE:NLS) down 18.3% to $14.50.
But the large names also had a headache. Macy’s (NYSE:M) ended up 0.2% at $32.36 but not before its credit rating was downgraded by S&P Global to ‘BBB-’ from ‘BBB’ — leaving it one notch above junk status — with a negative outlook.
It was starting to look altogether too predictable. US stocks opened lower on Wednesday despite futures trading indicating a higher start.
The S&P 500 opened lower albeit it is now paring losses. It was last down 0.2% at 2360 and led by Newfield Exploration (NYSE:NFX) down 7% at $39.51 as oil prices sagged, with the West Texas Intermediate down 1.3% to $53.60, as well as First Solar Inc (NASDAQ:FSLR) down 6% at $34.40 after fourth-quarter 2016 earnings of $1.24 a share, beat the Zacks Consensus Estimate of 97 cents by 27.8% - but the reported number declined 22.5% from the prior-year figure of $1.60.
The Dow and Nasdaq were both lower too.
The S&P Midcap 400 fell by 0.3% to 1744 and led by ex-dividend Texas Roadhouse Inc (NASDAQ:TXRH) down 12.6% to $41.79 a day after the restaurants group increased its quarterly dividend 10.5% to $0.21 per shares.
The S&P Smallcap 600 was down 0.4% at 858 and led by Nautilus Group (NYSE:NLS) down 12.4% to $15.55 a day after posting $0.38 EPS for the quarter, missing the Thomson Reuters’ consensus estimate of $0.41 by $0.03.
US stocks are on autopilot, it seems, as again they are set to mark fresh record highs when they open on Wednesday as banks smell a rate hike and housebuilders have cheerful earnings news.
Having chalked intraday record highs and closed just a few integers off the previous session, the likes of the S&P 500 are set to leap 0.4%, the Nasdaq Composite up 0.3% and the Dow Jones Industrial Average – powered by the banks anticipating a possible March Fed rate hike – marked an eighth successive session of record gains the previous session and is set to open up a whopping 0.5%. That would be one of the sharpest percentage opening gains by the Dow in a year.
Some of the enthusiasm is based on the expectation that President Donald Trump will cut taxes and industry regulations. But most of it is based on an expectation the central bank will hike rates as soon as next month.
The investor euphoria has some commentators worried. Analysts at Goldman Sachs (NYSE:GS) one of the stocks to climb to record peaks in recent weeks and a powerhouse of the Dow’s own gains, have started to warn that the market enthusiasm may be over-cooked and that investors may be in for a rue awakening in the next few sessions.
The Federal Reserve will publish the minutes from its January meeting at 1400 ET (1900 GMT). It could serve as an opportunity for the Fed to hint at a possible March rate hike, a point made by some Fed officials in recent days.
In stock news, US luxury homes builder Toll Brothers (NYSE:TOL) posted stronger than expected quarterly results as strength in the jobs market and improving wages continues to bolster demand for homes.
Home building deliveries rose 12% year-on-year in the fiscal quarter to the end of January to 1,190 units. The company had previously said it expected to deliver between 1,000 to 1,250 units with an average price of between $750,000 and $780,000.
Meanwhile, net signed contracts, jumped by 22% to 1,522 units.
Toll Bros shares were up 5% at $33.60 pre-market.
Dish Network (NASDAQ:DISH) added new pay-TV customers in the fourth quarter, defying expectations for further corrosion in its subscribers as people increasingly watch shows on streaming services such as Netflix.
The pay-TV group controlled by satellite billionaire Charlie Ergen said it added 28,000 customers in the three months to the end of December, beating consensus forecasts for a loss of 87,000. The company lost 116,000 customers in the previous quarter.
Dish shares were up 2.3% at $64.25 pre-market.
Although US foods behemoth Kraft Heinz (NASDAQ:KHC) walked away from a merger with Unilever (NYSE:UL) on Monday, the Anglo-Dutch group has been provoked into a “comprehensive review” of options to deliver value to shareholders.
The company said that “the events of the last week have highlighted the need to capture more quickly the value we see in Unilever”.
It expects the review to be completed by early April.
Unilever ADRs were up 2.3% at $45.91 pre-market.
SatNav maker Garmin Ltd. (NASDAQ:GRMN) shares leapt up 9% to $54.99 pre-market after the company handsomely beat earnings estimates for the fourth quarter and offered upbeat guidance for 2017. The GPS maker said it had net income of $136.6mln, or 72 cents a share, in the fourth quarter, up from $132.4mln, or 70 cents a share, in the year-earlier period.
Meanwhile, Elon Musk's electric car company Tesla (NASDAQ:TSLA) will report its fourth-quarter earnings after the markets close.
Shares in Tesla have surged 30% since the start of the year.
Investors are betting on the success of its first mass market car, the Model 3, which is due to go on sale later this year. The company has already taken more than 300,000 orders for the car, which will have a starting price of around $35,000.