US: S&P 500, Nasdaq close at record highs on trade, vaccine developments

[NEW YORK] The S&P 500 and the Nasdaq hit all-time closing highs on Tuesday, but a drop in Apple stock capped gains from positive developments in US-China trade and fresh progress in the medical battle against the coronavirus pandemic.

The Dow, which has yet to reclaim its February high, ended the session lower.

Apple Inc weighed heaviest on all three indexes, its stock retreating 0.8 per cent days ahead of its four-to-one stock split.

That split, which will reduce Apple's weight in the Dow, prompted a reshuffle in the blue-chip industrial average, with Salesforce.com replacing ExxonMobil, Amgen taking Pfizer's spot, and Raytheon Technologies ousted by Honeywell International.

Salesforce.com, Amgen and Honeywell shares advanced 3.6 per cent, 3.2 per cent and 5.4 per cent, respectively.

"These changes reflect what has occurred in the overall business environment," said Robert Pavlik, chief investment strategist at SlateStone Wealth LLC in New York.

"But if (the Dow) were a portfolio drafted by a portfolio manager, the client would have fired the portfolio manager," Mr Pavlik added.

Trade officials in Washington and Beijing reaffirmed their commitment to Phase One of a bilateral trade deal, but goodwill between the countries soured as China called a US spy plane's flight through a no-fly zone a "naked provocation". British drugmaker AstraZeneca has begun trials of its antibody-based drug for the treatment and prevention of Covid-19, the latest development in a global race to combat the pandemic.

On the economics front, the Conference Board's Consumer Confidence index plunged to a six-year low this month, while a report from the US Commerce Department showed sales of new homes in July surged to a more than 13.5-year high.

"You have this dichotomy between what's happening in the stock market and the economy," Mr Pavlik said. "They're moving away from each other."

"Wall Street believes in a year from now the economy is going to improve and it's positioning itself to what it anticipates six months to a year from now."

The Dow Jones Industrial Average fell 60.02 points, or 0.21 per cent, to 28,248.44, the S&P 500 gained 12.34 points, or 0.36 per cent, to 3,443.62 and the Nasdaq Composite added 86.75 points, or 0.76 per cent, to 11,466.47.

Of the major sectors in the S&P 500, six ended the session higher, with communications services enjoying the largest percentage gain and energy falling the most.

American Airlines Group dropped 2.2 per cent after announcing it would layoff 19,000 employees in October unless the government extends airline payroll aid.

Electronics chain Best Buy beat analysts' second-quarter sales expectations but warned of a current quarter slowdown following the work-from-home demand surge. Its shares fell 4.0 per cent.

Medtronic rose 2.5 per cent after the medical device maker's quarterly profit beat consensus. The company said a revival in elective surgeries was boosting demand.

Salesforce.com jumped over seven per cent in extended trading after posting results.

Advancing issues outnumbered declining ones on the NYSE by a 1.05-to-1 ratio; on Nasdaq, a 1.48-to-1 ratio favoured advancers.

The S&P 500 posted 29 new 52-week highs and no new lows; the Nasdaq Composite recorded 58 new highs and 24 new lows.

Volume on US exchanges was 8.30 billion shares, compared with the 9.48 billion average over the last 20 trading days.

REUTERS