US : Dow, S&P 500 surge to highs; transports set record
Wall Street surged on Wednesday, with the S&P 500 and Dow hitting fresh record intraday highs, as equities continued their march upward after the presidential election of Donald Trump, even as his comments on prescription drug pricing wounded the healthcare sector.
The Dow Jones Transport Average .DJT, closely watched as a barometer of the broader market, hit a new all-time intraday high, surpassing its prior record from November 2014.
U.S. equities have climbed to new highs since Trump’s election, with investors encouraged by his plans for an economic stimulus package and to reduce corporate taxes and regulations.
“I think it’s continuation of the view that the new administration will be pro-business,” said Ernie Cecilia, chief investment officer of Bryn Mawr Trust in Bryn Mawr, Pennsylvania.
The Dow Jones industrial average .DJI rose 254.19 points, or 1.32 percent, to 19,505.97, the S&P 500 .SPX gained 21.37 points, or 0.97 percent, to 2,233.6 and the Nasdaq Composite .IXIC added 49.14 points, or 0.92 percent, to 5,382.14.
Gains were broad-based with nine of 11 sectors in positive territory.
A $ 3-billion trading program to buy a broad spectrum of stocks came into the market in the afternoon and “really just sparked this market to move higher and higher,” said Jonathan Corpina, senior managing partner for Meridian Equity Partners, an equity and options broker-dealer in New York.
Telecommunications .SPLRCL and real estate .SPLRCR, which are high dividend payers, posted the strongest sector gains.
“There’s a little bit of a bond market rally going on, certainly in the long end, so that means dividend stocks feel better,” said Brian Battle, director of trading at Performance Trust Capital Partners in Chicago.
Trump’s victory has been seen as a boon, particularly for financial and industrial stocks that have surged since the election.
But biotechnology and pharmaceutical stocks tumbled on Wednesday after Trump promised in a Time magazine article that “I’m going to bring down drug prices.”
The S&P healthcare .SPXHC fell 0.9 percent, by far the worst performing group. The Nasdaq Biotechnology index .NBI was off 2.7 percent, recovering from steeper losses initially after Trump’s comments were publicized.
Trump’s effect was seen on Tuesday, as well, with Boeing’s (BA.N) stock falling briefly after his tweet that an order for a revamped Air Force One plane should be canceled over high costs.
“I think it is a new fact of life, going forward, that fundamentals can be swept aside any day by comments from the (President-elect),” said David Donabedian, chief investment officer of Atlantic Trust Private Wealth Management.
In corporate news, Western Digital (WDC.O) rose 8.1 percent after the data storage company raised its second-quarter profit and revenue forecasts. The stock was the top percentage gainer on the S&P.
Advancing issues outnumbered declining ones on the NYSE by a 3.19-to-1 ratio; on Nasdaq, a 1.85-to-1 ratio favored advancers.
The S&P 500 posted 86 new 52-week highs and 7 new lows; the Nasdaq Composite recorded 305 new highs and 26 new lows.
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