Market closed higher on Tuesday with the three main benchmarks notching up records during the same trading session for the first time in six weeks. Investors regained their appetite for risk following weaker than expected impact of Hurricane Irma and a nuclear missile from North Korea anticipated over the weekend failed to materialize. Financials continued its streak of gains for the second straight day following an increase in yield of the 10-year Treasury note. Speaking at an investment conference, U.S. Treasury of Secretary stated that the Trump administration expects tax reforms to materialize by the year end.
The Dow Jones Industrial Average (DJIA) closed at 22,118.86, gaining 0.3%. The S&P 500 Index (INX) increased 0.3% to close at 2,496.48. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 6,454.28, declining 0.3%. A total of 5.91 billion shares were traded on Tuesday, higher than the last 20-session average of 5.79 billion shares. Advancing issues outnumbered decliners on the NYSE by 1.71-to-1 ratio. On the Nasdaq, advancers outnumbered decliners by a 1.70-to-1 ratio. The CBOE VIX increased 1.4% to close at 92.39.
Benchmarks Close at Record High after Six Weeks
The Dow surged 61.49 points to end the session above the psychological 22,000 milestone. This marks the blue-chip index’s 36th record close for 2017. Such gains were made possible by a rally in shares of Goldman Sachs (GS - Free Report) and DowDuPont (DWDP) which increased 2.2% and 2.5% respectively. However, gains for the Dow were pared by a decline in the shares of McDonald’s (MCD - Free Report) . Shares of McDonald’s declined 3.2% following lackluster reports regarding the food-chain operator’s sales growth.
The S&P 500 gained 8.37 points and posted its second straight day of gains, notching up the 32nd record for 2017. Of the 11 major sectors of the S&P 500, nine finished in positive territory with financials leading the advancers. The Financial Select Sector SPDR Fund (XLF) ended the session up 1.1%, posting its second consecutive day of gains. Such gains were achieved following increase in the yield on 10-year Treasury note which hit 2.17%. This led to gains for Goldman Sachs and JP Morgan (JPM - Free Report) which increased 1.2%. Meanwhile, Nasdaq ended the session up 22.02 points and registered its 47th record for the year. Both the companies possess a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Economists are of the view that markets gained traction primarily because the effect of Hurricane Irma was weaker than expected and also North Korea’s decision to test another missile over the weekend. Though priced in, this also led to trade volumes slowly coming back to normal.
Retroactive Tax Reforms to Be in Place by December
U.S. Secretary of Treasury Steve Mnuchin announced on Tuesday that the Trump administration expects tax reforms to materialize by the year end. He also commented that the administration was planning to backdate the reforms to Jan 1, 2017. “Backdating is still something we are considering and it would be a big boon for the economy," said Mnuchin at a conference organized by CNBC.
Though the legislation for such reforms has not been prepared by the Congress, members of the GOP are confident tax reforms will reach fruition after the debt ceiling extension measure was passed last week. Moreover, in an address to lawmakers, President Trump urged that work on tax legislation be pushed forward rather than waiting till the end of September.
Job Openings Hit a Record High
In a report, the United States Labor Department said that job openings in the United States increased to 6.17 million in July, , for the first time since 2000. Analysts noted that such a performance has come after Trump’s decision to end the Deferred Action Childhood Arrivals program (DACA).
Meanwhile, education and health together added 1.1 million jobs to the economy, the most across all the industries in the United States. This was followed by retail, manufacturing, finance, insurance and construction, which added 625,000, 400,000, 270,000 and 232,000 jobs respectively to the economy.
Stocks That Made Headlines
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American Airlines August Traffic Rises, Q3 View Bearish
American Airlines Group Inc. (AAL - Free Report) has reported traffic figures for August, registering a rise, measured in revenue passenger miles (RPMs), to 21.19 billion from 20.44 billion, reported a year ago. (Read More)
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