U.S. Stocks Up, Led by Bank Shares
Financial stocks lifted the S&P 500 Tuesday as the index notched a fourth consecutive session of gains.
U.S. stocks have been resilient in recent months to investors' concerns that political turmoil in Washington could push back the Trump administration's plans for policy changes like tax cuts and fiscal stimulus. A strong corporate earnings season and a largely stable economy are helping major indexes stay buoyant, investors and analysts say.
"First-quarter profits were clearly exceptional -- not just better than what analysts forecasted -- and I think that's the primary reason why this market just keeps driving higher," said Ed Keon, managing director and portfolio manager with QMA, a multiasset manager owned by Prudential Financial.
The Dow Jones Industrial Average rose 43 points, or 0.2%, to 20938 on Tuesday. The S&P 500 added 0.2% and the Nasdaq Composite edged up less than 0.1%.
Financial stocks in the S&P 500 rose with yields, ranking among the best-performing sectors in the broad index for the day. Morgan Stanley shares added 1.8%, Goldman Sachs Group rose 1.7% and Huntington Bancshares gained 2%.
Government bonds edged lower, with the yield on the 10-year U.S. Treasury note rising to 2.285% from 2.254% on Monday, according to Tradeweb. Yields rise as bond prices fall.
Consumer discretionary shares fell 0.4% in the S&P 500, dragged lower by shares of auto-parts companies. Shares of AutoZone lost 12% after the company reported a slide in same-store sales and earnings that missed analysts' expectations.
Later this week, investors are looking ahead to the release of minutes of the Federal Reserve's May meeting on Wednesday.
Some investors are speculating that the central bank could hold interest rates steady at its June meeting following the recent decline in the dollar and Treasury yields. But others say the Fed is on track to continue raising rates.
"We think they're going to go in June. There seems [to be] no reason for them not to -- the economy seems strong," said Mike Bell, global market strategist at J.P. Morgan Asset Management.
Elsewhere, the Stoxx Europe 600 rose 0.2%, led by gains in shares of banks and technology firms, as investors looked past a blast at a concert hall in Manchester, England, late Monday.
The British pound was 0.1% lower against the U.S. dollar recently, while some initial buying of havens such as government bonds from earlier in the session eased.
Asian markets settled mostly lower, with the Shanghai Composite Index down 0.5% and the Shenzhen Composite Index losing 2.1%. Japan's Nikkei Stock Average fell 0.3% and Australia's S&P/ASX 200 declined 0.2%.
Write to Akane Otani at akane.otani@wsj.com and Christopher Whittall at christopher.whittall@wsj.com
Shares of financial companies lifted major U.S. stock indexes to their fourth consecutive session of gains.
U.S. stocks have been resilient in recent months, despite some investors' concerns that the Trump administration could struggle to push through plans for policy changes like tax cuts and fiscal stimulus.
A strong corporate earnings season and a largely stable economy are helping major indexes stay buoyant, investors and analysts say, despite lingering uncertainty over the scale and timing of the administration's policies.
"Yes, we have some political noise, but the company fundamentals remain pretty supportive," said Jean Medecin, a member of the investment committee at Carmignac.
The Dow Jones Industrial Average rose 43.08 points, or 0.2%, to 20937.91 on Tuesday. The S&P 500 added 4.4 points, or 0.2%, to 2398.42 and the Nasdaq Composite edged up 5.09 points, or less than 0.1%, to 6138.71.
Financial stocks in the S&P 500 rose along with U.S. government bond yields, and the sector finished as the best performer in the broad stock index for the day. Morgan Stanley shares added 76 cents, or 1.8%, to $42.42 and Goldman Sachs Group shares rose 3.62, or 1.7%, to 219.64.
Government bonds fell, with the yield on the 10-year U.S. Treasury note rising to 2.285% from 2.254% on Monday. Yields rise as bond prices fall.
Consumer-discretionary shares fell 0.4% in the S&P 500, dragged lower by shares of auto-parts companies. Shares of AutoZone lost 78.09, or 12%, to 581.40 -- its biggest one-day percentage decline since 2008 -- after the company reported a slide in same-store sales and earnings that missed analysts' expectations. Advance Auto Parts shares fell 6.71, or 4.6%, to 140.66.
U.S. crude oil for July delivery rose 0.7% to $51.47 a barrel, posting its fifth consecutive session of gains, as investors grew increasingly optimistic the Organization for Petroleum Exporting Countries will agree to extend output cuts at a meeting later this month. It was crude's highest settlement since April 18.
Elsewhere, the Stoxx Europe 600 rose 0.2% as investors looked past a blast at a concert hall in Manchester, England, late Monday.
The British pound was recently 0.3% lower against the U.S. dollar.
Asian markets settled mostly lower, with the Shanghai Composite Index down 0.4% and Japan's Nikkei Stock Average falling 0.3%.
Write to Akane Otani at akane.otani@wsj.com and Christopher Whittall at christopher.whittall@wsj.com
(END) Dow Jones Newswires
May 23, 2017 17:07 ET (21:07 GMT)