Dow transports notch first intraday high since March 1 in early trade
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The Dow Jones Industrial Average touched a fresh record Monday, on the back of a rally in energy and financials, but tech shares lagged behind as investors kicked off trading in July.
Gains accelerated in an abbreviated session ahead of the Fourth of July holiday on Tuesday, after an upbeat report on manufacturing.
Read:Which markets are closed for the Fourth of July? (http://www.marketwatch.com/story/july-4th-which-markets-are-closed-2017-06-30)
The Dow Jones Industrial Average climbed 152 points, or 0.7%, at 21,502, off its intraday record of 21,562.75, which had been aided in part by a 2% rally in shares of Walt Disney Co. (DIS), adding 14 points to the blue-chip gauge's early surge on speculation that it might strike a deal (http://www.marketwatch.com/story/disney-shares-up-almost-2-on-report-verizon-is-eyeing-deal-2017-07-03) with Verizon Communications Inc.(VZ).
Sharp advances in Goldman Sachs Group Inc. (GS), J.P. Morgan Chase & Co. (JPM), and Chevron Corp. (CVX), also contributed to the Dow's Monday rally.
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The S&P 500 index rose about 8 points, or 0.3%, at 2,431, led by sharp gains in the energy and financial sector, but pressured by a 0.6% slump in tech.
Meanwhile, the Dow Jones Transportation Average also touched an intraday record of 9,666.71 during the session, marking the indicator's first all-time high since March 1. Market technicians consider records in the transports benchmark and the Dow at the same time as a bullish sign of Wall Street health.
Lagging behind the benchmarks, however, was the Nasdaq Composite Index , down 23 points, or 0.4%, at 6,116, after trading modestly higher, earlier in the session. The tech sector has been among the more volatile segments of the market after reaching a number of popular stocks, including Amazon.com Inc. (AMZN) in early June, hit records, raising concerns that valuations were getting rich.
"I think what we have here is an environment that is reasonably good," said John Manley, chief equity strategist at Wells Fargo Funds Management. Manley said the environment for investing continues to be a good one and that earnings ahead may further bolster confidence, if the corporate results for the second quarter come in better than expected.
"The environment is not a bad environment and I look around and say valuations are high but they are kind of on the low end of high, but if nothing unexpectedly bad happens, it probably is not going to matter," said Manley.
"The economy seems reasonably healthy and that properly supports what we've seen the market today," said David O'Malley CEO of Penn Mutual Asset Management. He added that a recent reflation in bonds, with the 10-year Treasury offering a yield of 2.34%, compared with 2.22% at the same time last week, has helped the overall market because higher yields are a positive to financials. "If the banks start outperforming that could really deliver a lift to the market," he said
The New York Stock Exchange will end trading at 1 p.m. Eastern on Monday and will be closed on Tuesday. Government bond markets wrap up at 2 p.m. Eastern.
"Trading volumes are likely to be relatively subdued at the start of the week, as we've already seen evidence of in the Asian session overnight, due to Tuesday's bank holiday in the U.S. and the half day today that precedes it," said Craig Erlam, senior market analyst at Oanda, in a note.
See:Stock market poised to kick off July 4 week with fireworks of its own (http://www.marketwatch.com/story/stock-market-poised-to-kick-off-july-4th-week-with-fireworks-of-its-own-2017-06-30)
On Friday, the S&P 500 and Dow closed modestly higher as the second quarter came to an end (http://www.marketwatch.com/story/us-stock-futures-point-to-a-comeback-from-tech-led-battering-2017-06-30), while the tech-laden Nasdaq Composite finished slightly lower for the session. The S&P and Dow have advanced for seven straight quarters, while the Nasdaq has gained for four quarters in a row.
Economic news: On the data front, ISM's manufacturing index rose to 57.8 in June (http://www.marketwatch.com/story/disney-shares-up-almost-2-on-report-verizon-is-eyeing-deal-2017-07-03), compared with 54.9 in the prior month, marking its highest level since 2014. A reading of at least 50 indicates expansion. A separate reading from IHS Markit showed manufacturing PMI falling to 52.0 in June from 52.7. Economists polled by MarketWatch had expected a reading of 55.5% for the ISM gauge.
Meanwhile, May construction spending was flat (http://www.marketwatch.com/story/construction-spending-zigzags-higher-commerce-says-2017-07-03), compared with a reading for April that was lifted by the Commerce Department.
Check out:MarketWatch's Economic Calendar (http://www.marketwatch.com/economy-politics/calendars/economic)
Other markets:Oil futures (http://www.marketwatch.com/story/oil-gains-aiming-for-eight-winning-sessions-in-a-row-2017-07-03) traded higher, as crude tried for its eighth up session in a row. European stocks gained, while Asian equity markets closed mixed (http://www.marketwatch.com/story/asian-markets-mixed-as-china-hong-kong-bond-trading-link-opens-2017-07-02). Gold futures pulled back, and a key dollar index advanced.
Stocks to Watch: Shares in Tesla Inc.(TSLA) rose 1.7% after Elon Musk, the company's CEO, said production for its Model 3 electric car should start this Friday (http://www.marketwatch.com/story/teslas-model-3-to-begin-production-on-friday-elon-musk-2017-07-03). The $35,000 vehicle has "passed all regulatory requirements for production two weeks ahead of schedule," Musk said on Twitter.
Shares of EQT Corp. (EQT) rose 0.6% in early trade after The Wall Street Journal reported that activist investor Jana Partners took a 5.8% stake in the energy-and-production company.
(END) Dow Jones Newswires
July 03, 2017 12:29 ET (16:29 GMT)