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US: Stocks rally on renewed Trump optimism; Nasdaq, S&P hit records

41092456 - 10_01_2017 - US-DOW-FLIRTS-WITH-RECORD-HIGH-OF-20,000.jpg

[NEW YORK] Wall Street stocks posted solid gains on Tuesday, brushing aside mixed corporate earnings and lingering worries about trade protectionism, and betting that President Donald Trump will indeed produce the pro-growth policies they have been hoping for.

The Nasdaq and S&P 500 each ended at fresh all-time highs, and the Dow moved back to within striking distance of the 20,000-point milestone as investors revived the optimism that pushed the market to repeated records for about six weeks after the election.

Stocks have gone sideways since then as the optimism outpaced reality.

Until Tuesday, when investors were encouraged by Mr Trump's moves to advance a pair of US pipeline projects, blocked by former president Barack Obama, and concluded that "maybe he will get something done in particular on tax reductions and possibly even economic stimulus," said Sam Stovall, chief investment strategist at research firm CFRA.

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Jack Ablin, chief investment officer at BMO Private Bank said until now it seemed like backing away from trade pacts like the North American Free Trade Agreement and the Trans-Pacific Partnership "were the big priorities and investors were sort of disappointed with that."

Mr Ablin also said he was encouraged by positive comments from House Speaker Paul Ryan about infrastructure spending, which assuaged fears congressional Republicans would block the programme.

Tuesday's gains were some of the biggest of 2017 so far. The Dow Jones Industrial Average finished at 19,912.71, up 0.6 per cent.

The broad-based S&P 500 rose 0.7 per cent to 2,280.07, while the tech-rich Nasdaq Composite Index climbed to 5,600.96, both new records.

DuPont and Dow each gained about 4.5 per cent as DuPont reported better-than-expected earnings and pushed back the time-frame for completing a merger of the chemical giants. DuPont executives told analysts they were working with regulators on a divestiture package to win approval for the deal.

Verizon slumped 4.7 per cent after it reported lower-than-expected fourth-quarter earnings and said it was pushing back the target date for its US$4.8 billion acquisition of core Yahoo assets following a pair of large data hack disclosures by Yahoo.

Yahoo gained 3.7 per cent, lifted by a strong report from Chinese internet giant Alibaba, in which it has a large stake. Alibaba rose 2.5 per cent after reporting a 54 percent surge in quarterly sales to 53.25 billion yuan (S$10.9 billion.)

General Motors rose 1.0 per cent and Ford 2.4 per cent after the chief executives of the automakers pledged to work with the president to boost US employment following a meeting with Mr Trump.

TransCanada, backer of the Keystone XL pipeline, and Energy Transfer, the driving force of the Dakota Access Pipeline, each rose about 3.5 per cent after Trump signed executive orders to revive both projects.

AFP

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