US stocks hit record highs for the third successive session on Tuesday, with the S&P 500 market bellwether and Dow Jones Industrial Average both closing at their record intraday highs.
The S&P 500 closed up 0.4% at 2,337.58 while the Dow ended up 0.5% at 20,504.41. Only a few weeks ago the market got excited when it finally broke through 20,000 and now it is above 20,500.
The tech-heavy Nasdaq Composite ended just shy of its intraday record high of 5,783.09, up 0.3% at 5,782.
Meanwhile, another powerhouse this week, the small-cap Russell 2000 closed also ended just shy of its intraday record high of 1,397.14, up 0.3% at 1396. The top gainer was Cynosure Inc (NASDAQ:CYNO), up 28% to $65.95.
By a slither, the mid-cap S&P 400 also mustered a fresh intraday record high of 1,730.25 before closing up 0.2% at 1,729. On Monday it marked a record at 1,729.36. The top gainer was Charles River Laboratories Intl (NYSE:CRL) up 7.9% to $88.95.
Only the narrower gauge of small caps, the S&P 600, failed to mark a fresh record after making that level on Monday. It closed on Tuesday up 0.2% at 853. Again, the top riser was Cynosure.
It was also a good day for equities everywhere it would seem. Global large-and-mid capitalisation stocks have climbed to within easy striking distance of setting a new all-time high for the first time in almost two years, led by a strong performance by US equities.
The MSCI all-world index, which tracks companies in 46 countries that account for 85% of the investable equities market, closed on Monday at 441.14, just 0.35% away from the all-time high it struck in May 2015.
The gauge has climbed by 23.5% over the past 12 months, partly reflecting a sharp rebound from a fall at the start of last year.
The New York session had begun inauspiciously, with US stocks on the back foot as investors awaited Federal Reserve chair Janet Yellen’s testimony before Congress. While Yellen said monetary policy is not on a “preset course” she did say that it would be “unwise” to delay tightening monetary policy for too long. However, investors appeared to take courage from her upbeat view on the US economy and the chances of three rate hikes in 2017 were raised by activity on the Federal funds rate.
With the prospect of higher interest rates, financial stocks lead the benchmark S&P 500, adding 1.3%. Meanwhile, rate-sensitive utilities fell 0.8%. All fairly textbook.
But the overall riser on the S&P 500 was cosmetics group Coty Inc (NYSE:COTY) up 5% at $19.28 although there was no specific news to power the shares, except for it being Valentine’s Day.
The second-biggest riser was General Motors Company (NYSE:GM) up 4.6% to $37.15 after France's PSA Group, maker of Peugeot and Citroen cars, said it is exploring a possible takeover of Opel, General Motors' money-losing European business.
PSA Group said in a statement Tuesday that it was considering "numerous strategic initiatives" that would expand the existing cooperation, and that a takeover of Opel was one of them. PSA Group and GM are already involved in several joint projects in Europe which gives the corporate news credibility.
Kate Spade (NYSE:KATE) shares shot up 4.4% to $19.61 after a report that said the company was awaiting first-round bids. Several media indicated first bids could land this month.
Meanwhile, Apple Inc (NASDAQ:AAPL), the world’s biggest company by market value, got a little bit bigger on Tuesday as its shares breached the previous all-time high that was set in April 2015.
The California-based group’s shares jumped 1.3% on the day to $135.02. They had set a new record close on Monday. Today they topped that.
Not to be outdone, Toronto’s TSX Composite index also marked a fresh record high at 15,800.34 intraday before closing up 0.2% at 15,786.
Early trading
US stocks were flat-to-lower on Tuesday with Goldman Sachs leading a financial stocks rally on Federal Reserve comments that suggested a trio of rate hikes this year.
The S&P 500 and Nasdaq Composite failed to rise so far this session, while the Dow Jones Industrial Average, which has a strong smattering of banks including 24%-weighted Goldman Sachs (NYSE:GS) managed to just pip higher on the day after banks lapped up the rate outlook from Fed chair Janet Yellen.
In fact, shares in Goldman Sachs surpassed the record closing high they set in 2007 before the plunge that was ignited by the ensuing subprime mortgage-cum-interbank financial crisis.
Goldman shares were up as much as much as 1.3% on Tuesday to $249.87, above the previous closing peak of $247.92 that was struck on October 31, 2007. However, they were still slightly short of the intraday high of $250.70 struck that same day.
In her prepared remarks, Yellen played down expectations of a March rate rise – which no one seriously expected anyway - and signalled “considerable” uncertainty over US fiscal policy. However, she also said that it would be “unwise” to wait too long before adding to the December 2016 rate increase.
Odds that the US central bank will lift interest rates 75 basis points this year — through three 25 bps tightenings — climbed to 34% after she delivered prepared remarks to Congress, according to calculations on federal funds futures. Before she spoke it ran at 30%.
That’s still not a commanding majority, but a start.
Yellen also distanced herself from suggestions the Fed might start to reduce its balance sheet of debt bought under successive quantitative easing programmes.
The S&P 500 market bellwether was down 0.1% at 2326 and led by tech stocks of which the kingpin was Logmein Inc (NASDAQ:LOGM), the remote PC access provider. The stock was down 6.9% at $96.22.
On the upside, General Motors Co (NYSE:GM) was up 5% at $37.28 after France's PSA Group, maker of Peugeot and Citroen cars, says it's exploring a possible takeover of Opel, General Motors' money-losing European business.
The S&P Midcap 400 was flat at 1725 while the S&P Smallcap 600 was flat at 851.
Pre-Open
US stocks are seen opening flat on Tuesday with investors wary ahead of a testimony by Fed chief Janet Yellen in light of stronger-than-expected producer prices inflation data.
If investors are feeling romantic on Valentine’s Day it is only because they remember a better start to the session than this.
The S&P 500 and Dow Jones Industrial Average are seen up just 0.02% while the Nasdaq Composite is set for a totally flat start. On Monday, the trio of tickers plus small-cap Russell 2000 and even Toronto’s TSX Composite marked intraday record highs before easing off as oil prices slid.
US producer prices climbed at a more rapid rate than Wall Street had anticipated in January, underscoring the growing inflationary pressure in the American economy.
The producer price index was up by 0.6% in January from the previous month, double the rise that Wall Street economists had expected. Excluding the more volatile food and energy components, the so-called core gauge was up by 0.4%, compared with forecasts for a rise of 0.2%.
Federal Reserve chair Yellen is giving semi-annual testimony to the US Senate at 1000 ET (1500 GMT).
The Fed is considered the driving force behind the multi-year bull market rally in stocks since the Great Recession of 2009.
What Yellen says about the timing and magnitude of future interest rate hikes could keep the rally going full steam ahead -- or stop it dead in its tracks. But the big money is on a hawkish tone in light of the stronger PPI data.
The Fed last raised rates in December for only the second time in a decade. The previous time was in December 2015.
In stock news, shares in General Motors (NYSE:GM) are getting a 4% boost premarket after automaker PSA Group said it's considering buying GM's Opel business unit in Europe. The shares were last up 3.7% at $36.90 pre-market.
Engineering firm Rolls-Royce (OTCMKTS:RYCEY)is having a tough day in London trading. Shares in the aircraft engine-maker fell by about 4% after the firm warned that pre-tax profits in 2016 were down 49%.
The British engineering giant said in January that it reached settlements with authorities in the UK, the US and Brazil over bribery allegations. These large settlements contributed to the drop in profit. RR’s ADRs had not traded before the bell.
T-Mobile US (NASDAQ:TMUS) shares slipped early on Tuesday despite the wireless network reporting better than expected sales and profits for the fourth quarter.
Earnings per share rose to 45 cents from $10.18bn in revenue, eclipsing consensus forecasts for 29 cents a share on $9.84bn in revenue. Profits widened to $390mln, from $297mln a year ago.
T-Mobile’s US shares were down 0.8% at $60.40 pre-market.
Toshiba's (OTCMKTS:TOSYY) chairman is stepping down as the firm revealed a $6.3bn writedown at its troubled US nuclear business. Toshiba shares have not traded pre-market.
The Japanese conglomerate missed its own deadline to report earnings earlier on Tuesday, sending shares down 8% in Tokyo.
Toshiba stock has lost about half its value since the company warned in December that it was expecting billions of dollars in nuclear-related losses.