U.S. Stocks Extend Gains on Strong Car Sales

By Riva Gold Features Dow Jones Newswires

Treasury yields, dollar around highest since July

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-- Hong Kong stocks post best day in more than a year

-- Wall Street set for new records

U.S. stocks extended gains Tuesday as upbeat car sales data helped lift major indexes toward fresh records.

Major automakers posted solid sales gains in September, a boost to the industry after months of declining results. General Motors shares jumped 2.5% and Ford's stock climbed 1.9% after both companies reported sharply higher sales of pickup trucks and SUVs, their most profitable products.

The gains helped lift broader indexes. The Dow Jones Industrial Average rose 70 points, or 0.3%, to 22627 in recent trading. The S&P 500 and the Nasdaq Composite gained 0.1%.

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Tuesday's rise built on Monday's records, which were hit as data bolstered optimism about the economy. The Institute for Supply Management reported Monday that U.S. manufacturing activity reached a 13-year high in September, exceeding expectations, following solid readings in China and Japan earlier in the week.

"We have another round of data that shows the U.S. economy and international global economy is doing quite well right now," said Willie Delwiche, investment strategist at Robert W. Baird & Co.

"That's being fairly well received by stocks," he added, though he cautioned the market may have gotten slightly ahead of itself in the short term with investor sentiment quite optimistic.

Momentum around an improving economy supports the U.S. Federal Reserve raising interest rates later this year. That, as well as investor bets on changes to the tax code, has lifted U.S. Treasury yields higher in recent days, though on Tuesday they slipped. Yields on the 10-year Treasury note edged down to 2.334%, according to Tradeweb, from 2.337% Monday. Yields move inversely to prices.

Financial stocks have risen along with Treasury yields, but on Tuesday they, too, pulled back slightly. In the past month, financial companies in the S&P 500 have climbed 5.5%, making them among the best performers in the index.

Signs of economic growth also has boosted the dollar. The WSJ Dollar Index, which tracks the value of the U.S. dollar against a basket of 16 currencies, rose less than 0.1% after settling at its highest since late July.

In European stocks, the Stoxx Europe 600 was flat in afternoon trading after rising for eight straight sessions, its longest winning streak since July 2015.

Spanish stocks again dragged down the wider index. Catalan leaders and the government in Madrid have been weighing their options after Catalan voters appeared to overwhelmingly back independence in a referendum boycotted by opponents and marred by violence over the weekend.

Spain's IBEX 35 index fell 0.8% Tuesday, while the gap between Spanish and German government bond yields continued to widen modestly. The premium demanded to hold Italian debt has also nudged higher.

The euro fell sharply Monday but showed signs of stabilizing Tuesday at $1.1757. Spain's credit markets have also been relatively resilient as many investors expect Catalonia to ultimately remain part of Spain.

Earlier, Hong Kong led a climb in Asian markets with the Hang Seng Index jumping 2.25% in its best session of the year. Shares of car marker Geely surged after Morgan Stanley upgraded its rating, while Chinese bank stocks moved higher after the nation's central bank over the weekend reduced the reserves select banks are required to keep with it.

Japan's Nikkei rose 1.1%, building on a two-year high as a weaker yen helped shares of exporters who translate revenue overseas.

Markets in mainland China and South Korea are closed for the week.

--Kenan Machado and Corrie Driebusch contributed to this article.

Write to Riva Gold at riva.gold@wsj.com

(END) Dow Jones Newswires

October 03, 2017 12:02 ET (16:02 GMT)