Dow Flirts With Fresh Record As Stock-market Gains Firm

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U.S. stocks rose on Tuesday as the market's postelection updraft appeared set to continue, with the Dow Jones Industrial Average trying to keep its grip on late-session gains after six winning sessions in a row and three straight record closes. 

There also was a respite in what has been a rout in U.S. government bonds, suggesting that investors are reassessing their positions after a sharp swing in the wake of Republican Donald Trump's surprise election win. 

Wall Street has been in an uptrend since last week's presidential election. Many investors expect that Trump's policy proposals, including massive cuts to corporate tax rates, infrastructure spending, and reduced financial and environmental regulation, will provide a boost to companies, though details remain scarce. 

The Dow Jones Industrial Average clawed back from an earlier deficit, and was last up 33 points, or less than 0.2%, to 18,902, with shares of Microsoft Corp.(MSFT) and Verizon Communications Inc. (VZ) leading the advance. Earlier, the average had been down by as many as 63 points. 

The blue-chip gauge was pressured by financial stocks, which retreated following a massive rally last week. The Financial Select Sector SPDR ETF (XLF) fell 0.5%; it jumped more than 11% last week. Goldman Sachs Group Inc.(GS) shares rose 0.1% after an earlier decline, while J.P. Morgan Chase & Co.(JPM) lost 0.9%. 

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The S&P 500 index rose 15 points, or 0.7%, to 2,179, led by a 2.5% jump in energy stocks. Oil futures jumped nearly 6% after three sessions of losses, amid ongoing efforts to shore up a proposed production cut by members of the Organization of the Petroleum Exporting Countries. Exxon Mobil Corp.(XOM) shares rose 1.8%. 

The Nasdaq Composite Index --which has been under pressure of late as technology stocks have fallen--rose 64 points to 5,282, a gain of 1.2%. 

"We've been concerned about valuations for a year and a half, but if these policies lead to an acceleration in earnings, those concerns will go away. Right now that's a big if, but it's what markets are telling us," said Bruce Bittles, chief investment strategist at Robert W. Baird & Co, who expects the market's rally to persist. 

"We're going through a big transition in a number of ways, including from a regulated economy to a more free one. That process is only a few market days old, and for it to fully unfold will take more time," he said.

In the latest economic news, retail sales rose 0.8% in October, making for the best two-month stretch since early 2014. The growth rate was modestly above what analysts had forecast. Separately, a measure of New York-area manufacturing conditions turned positive in November for the first time in four months while business inventories rose 0.1% in September. 

Positive economic news, however, is acting like a double-edged sword, said Karyn Cavanaugh, senior market strategist at Voya Financial. 

"Any questions about the [health of the] economy are subsiding," Cavanaugh said. "But the more good news we get, the more rates will rise." 

After nearly two weeks of declines before the election, followed by more than a week of gains, investor euphoria is cooling off because of the expectation of higher interest rates, she said. 

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On the Fed front, Boston Fed President Eric Rosengren said expectations of a December rise in interest rates are plausible. 

Vice Chairman Stanley Fischer said at the Brookings Institution that U.S. capital market liquidity is mostly adequate but that "flash" events may happen more frequently. Dallas Fed President Rob Kaplan was also scheduled to speak about discussing competitiveness in an appearance at the George W. Bush Center in Dallas. 

Individual movers: Shares in American Airlines Group Inc.(AAL), United Continental Holdings Inc.(UAL) Delta Air Lines Inc.(DAL) and Southwest Airlines Co.(LUV) all traded higher, following news late Monday that Warren Buffett's Berkshire Hathaway Inc.(BRKA)(BRKA) had bought stakes in the carriers. 

Retailer Home Depot Inc.(HD) fell 3.6% despite posting better-than-expected quarterly results, while Dick's Sporting Goods Inc.(DKS) fell 10% following a weak outlook. 

Advance Auto Parts Inc.(AAP) shares rallied 14% after the auto-parts retailer's quarterly results topped expectations late Monday. 

Chesapeake Energy Corp.(CHK), Murphy Oil Corp.(MUR), Apache Corp.(APA) shares all rose more than 7% on the oil rally. 

Other markets: Europe's main stock benchmark ticked slightly higher, and Asian markets closed mostly lower. Gold futures settled up 0.2% at $1,224.50 an ounce, as the ICE U.S. Dollar Index retreated. Bond yields largely were pulling back after a jarring recent rise that lifted the yield on the 10-year Japanese government bond back above zero. 

--Victor Reklaitis in London contributed to this article.

By Wallace Witkowski, MarketWatch , Ryan Vlastelica 

 

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