Wall Street kicked off the third quarter on Monday by rallying to new all-time highs, lifted by energy and bank stocks.
The Dow Jones Industrial Average surged 129 points, or 0.61%, to 21,479, after touching a new intraday record of 21,548 in late morning trading. The S&P 500 increased 5.6 points, or 0.23%, to 2,429. The Nasdaq Composite closed 30 points lower, or 0.5%, at 6,110.
U.S. stocks had a blockbuster start to 2017 with fresh records for all three major indices. Technology names like Apple (NASDAQ:AAPL) helped carry the market, as the S&P information technology sector climbed more than 16% over the first half. In the second half of 2017, the broader market may be in for a calmer finish to the year if tech stocks continue to retreat from their elevated valuations. On Monday, the tech sector joined utilities and consumer stocks in the red.
“The challenge of 2017 is that we are in a late-cycle, momentum-driven market where valuation is at an extreme,” Russell Investments said in a recent note to clients, adding that low risk in the near-term “stops us from being too bearish.”
The rally on Monday was fueled by higher oil prices that increased optimism around energy producers. Oil companies such as Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) gained more than 2% during the session. Energy stocks in the S&P 500 were up 2% overall, leading all 11 S&P sectors.
Nymex West Texas Intermediate oil jumped 77 cents, or 1.7%, to $46.82 a barrel. Brent crude, the international benchmark, was up 1.4% at $49.46 a barrel.
Financials also traded higher in response to an uptick in the 10-year Treasury bond yield, which rose to 2.35% from about 2.3% on Friday. Morgan Stanley (NYSE:MS) led the top firms with a 2.7% gain, followed closely by Goldman Sachs (NYSE:GS) and J.P. Morgan Chase (NYSE:JPM). Higher bond yields indicate stronger returns for banks’ lending units.
Automakers also participated in the rally, despite reporting weaker sales for the month of June. General Motors (NYSE:GM) rallied 1.8%, while Ford (NYSE:F) jumped 3.3%. Detroit’s Big Three manufacturers continued to see strong demand for pickup trucks, which contribute a large portion of their profits.
In economic news, the U.S. Commerce Department said construction spending in May was flat amid a drop in housing starts.
Factory activity gained steam last month. The Institute for Supply Management’s index increased to 57.8 in June from 54.9 in the prior month, reflecting improvements in production, employment and new orders.