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US: S&P 500, Dow ease back after hitting new highs

[NEW YORK] The S&P 500 and the Dow touched new intraday highs at the open on Wednesday before easing back, as investors took a breather after a three-day record-setting rally amid signs of a steadying global economy.

Easing political tension in Japan and Britain and increased prospects of central banks providing stimulus post Britain's vote to leave the European Union have also helped reduce some uncertainty in global markets.

That sparked a broad rally on Tuesday that also led to the S&P 500 and the Dow notching new closing highs, and the Nasdaq to turn positive for the first time in 2016.

That optimism spilled over into Wednesday, with the S&P setting a new record of 2,156.45 and the Dow hitting 18,390.16.

At 9:46 am ET the Dow Jones Industrial Average was up 9.17 points, or 0.05 per cent, at 18,356.84.

The S&P 500 was down 0.07 points, or roughly flat, at 2,152.07.

The Nasdaq Composite was up 0.48 points, or 0.01 per cent, at 5,023.30.

"After the substantial rally, the markets are now looking for added fuel. Earnings and the ensuing comments that companies make are going to be the judge and jury as to where we go from here," said Andre Bakhos, managing director at Janlyn Capital in Bernardsville, New Jersey.

Now, with the US corporate earnings season ready to kick off in earnest, investors will peruse the results and outlooks to see if stocks justify their market valuations.

The S&P 500 is currently trading at 17.3 times forward earnings, compared with its 10-year average of 14.7, according to StarMine data.

While second-quarter earnings of S&P 500 companies are expected to fall 5 per cent, along the same lines as the first, growth is expected to occur throughout the second half of 2016.

Five of the 10 major S&P indexes were higher, led by a 0.6 per cent rise in utilities.

However, healthcare stocks gave the biggest boost to the S&P. Allergan rose 1.4 per cent, after CNBC reported that its merger deal with Teva was expected to be approved in the next two weeks.

JetBlue rose 3.3 per cent to $18.61 after reporting an 11.6 per cent rise in June passenger traffic.

Juno Therapeutics soared 22 per cent to $33.76 after the US health regulators removed a clinical hold on a trial for its cancer drug.

Another boost to the stock markets has been a hesitance by the US Federal Reserve to raise interest rates. The Fed at 2 pm ET will release its so-called Beige Book, a collection of remarks on the health of the economy, which investors will parse to see if fundamentals remain strong.

Advancing issues outnumbered decliners on the NYSE by 1,388 to 1,281. On the Nasdaq, 1,190 issues rose and 1,116 fell.

The S&P 500 index showed 40 new 52-week highs and no new lows, while the Nasdaq recorded 64 new highs and four new lows.