Major stock indexes edged up to post record closing highs on Wednesday with sector moves in the S&P 500 showing preference toward so-called defensive stocks.
While Wall Street reaction was muted to minutes of the most recent Federal Reserve policy meeting, a report that a market-friendly candidate was being pushed as successor to Janet Yellen at the helm of the U.S. central bank helped indexes close near the highs of the day.
Real estate, utilities, and consumer staples were among S&P 500 sectors that posted gains, while financials were pressured by a slip in Treasury yields and industrials also fell.
"You've got sector rotation grinding the indexes higher and it's hard to see what stops that," said Art Hogan, chief market strategist at Wunderlich Securities in New York.
Federal Reserve policymakers had a prolonged debate about the prospects of a pickup in inflation during their September meeting, but many policymakers still felt that another rate increase this year "was likely to be warranted."
"Nothing changes the opinion that the Fed is likely to hike rates after the December meeting," Hogan said.
Stocks ended near session highs after a report from Politico said Treasury Secretary Steven Mnuchin was pushing president Donald Trump to name Jerome Powell, seen as a safe pick for financial markets, as the next Federal Reserve chairman.
"The market prefers status quo," said Ken Polcari, director of the NYSE floor division at O’Neil Securities in New York.
"Everyone knows rates are going up but they prefer the policy that Yellen has laid out. Maybe the market is telling you it thinks it's going to be status quo."
Powell is seen as closer policy-wise to Yellen than another front-runner, Kevin Warsh.
The Dow Jones Industrial Average rose 42.21 points, or 0.18 percent, to end at 22,872.89, the S&P 500 gained 4.6 points, or 0.18 percent, to 2,555.24 and the Nasdaq Composite added 16.30 points, or 0.25 percent, to 6,603.55.
Gains in Wal-Mart and Johnson & Johnson nudged the Dow Jones Industrial Average to another record high but declines in financials kept gains on the S&P 500 in check.
J&J rose 2.1 percent to $136.65 after Jefferies upgraded the stock to "buy," saying the company's pharma division would help it top analysts' profit estimates.
The consumer staples sector got a boost from gains in Wal-Mart, which rose 1.9 percent, as well as from Kroger, which jumped 1.2 percent to $20.78 after news it was exploring the sale of its nearly 800 convenience stores.
Banks take the focus as JPMorgan Chase and Citigroup report results on Thursday, with analysts warning that results in the sector will largely be held back by low trading volumes compared with a year earlier.
"Third-quarter results of large banks are expected to be tepid," said Stephen Biggar, an analyst at Argus Research. "Trading revenue (will be) down due to low volatility and loan growth remaining flat to slightly negative."
With the S&P 500 up 14 percent in 2017, investors are betting on strong earnings growth across the S&P 500.
Wunderlich's Hogan said the catalyst to stop the grind higher in stocks would be "some big names missing the mark in earnings, away from any hurricane-related explanations."
General Electric fell 1.2 percent to $23.07 after JPMorgan said a dividend cut was "increasingly likely" and lowered its price target on the stock.
Advancing issues outnumbered declining ones on the NYSE by a 1.49-to-1 ratio; on Nasdaq, a 1.01-to-1 ratio favored advancers.
The S&P 500 posted 48 new 52-week highs and nine new lows; the Nasdaq Composite recorded 147 new highs and 28 new lows.
About 5.67 billion shares changed hands in U.S. exchanges, compared with the 6.1 billion daily average over the last 20 sessions.
(Reporting by Rodrigo Campos in New York; Additional reporting by Sruthi Shankar in Bangalore; Editing by James Dalgleish)