Financials Fuel Another Positive Day on Wall Street

Date | 13-12-2017 - 02:26 PM Article Type | Stock Markets Region | United States

Dow +118.77 at 24504.80, Nasdaq -12.76 at 6862.32, S&P +4.12 at 2664.11

[BRIEFING.COM] The U.S. equity market had another positive showing on Tuesday, with the S&P 500 and the Dow Jones Industrial Average closing at fresh record highs for the third session in a row.

Tuesday's session was, like Monday's, relatively quiet as investors continued to await the Fed's latest policy directive, which will cross the wires on Wednesday afternoon. The S&P 500 advanced 0.2% with seven of its eleven sectors finishing in positive territory. The Dow did modestly better, adding 0.5%, while the tech-heavy Nasdaq finished with a loss of 0.2%.

The heavily-weighted financial sector climbed 1.0% on Tuesday, extending its December gain to 2.5%--which is more than four times the S&P 500's month-to-date gain of 0.6%. Within the group, Dow component Goldman Sachs(GS 257.68, +7.55) was among the strongest names (+3.0%), helping the Dow Jones Industrial Average outpace its peers.

Finishing at the very top of the sector standings--just one step above the financial group--was the telecom services sector, which rallied 2.8%. Wireless giants AT&T (T 38.10, +1.20) and Verizon (VZ 53.19, +1.35) finished with respective gains of 3.3% and 2.6%. VZ shares were upgraded to 'Buy' at Nomura before the opening bell.

As for the other advancing sectors, none finished with a gain of more than 0.4%.

On the downside, the top-weighted technology sector (-0.3%) settled in negative territory, breaking a five-session winning streak. Chipmakers were particularly weak, evidenced by the 1.0% decrease in the PHLX Semiconductor Index, as was social media giant Facebook (FB 176.96, -2.08), which dropped 1.2%.

In corporate news, Dow component Boeing (BA 289.94, +6.78) announced a 20% increase in its quarterly dividend and a new $18 billion share repurchase program. The news sent the aerospace giant to a new all-time high (+2.4%) and helped fuel the Dow's relatively strong performance.

U.S. Treasuries ended the day mostly lower, but shorter-dated issues managed to eke out slim gains. The 2-yr yield slipped one basis point to 1.81%, while the benchmark 10-yr yield climbed two basis points to 2.40%. The three basis point increase in the 2yr-10yr spread helped fuel the financial sector's positive performance.

Elsewhere, equity indices in the Asia-Pacific region finished Tuesday on a lower note, with China's Shanghai Composite (-1.3%) pacing the retreat, while the Euro Stoxx 50 advanced for the third time in four sessions, adding 0.4%.

Reviewing Tuesday's economic data, which included the November Producer Price Index and the November Treasury Budget:

Producer prices rose 0.4% in November ( consensus +0.4%), while core producer prices increased 0.3% ( consensus +0.2%). Year-over-year, producer prices are up 3.1% and core producer prices have risen 2.4%.The key takeaway from the PPI report is that producer prices are rising and will create some profit margin pressures if the higher prices are not passed through to consumers.
The Treasury Budget for November showed a deficit of $138.5 billion ( consensus -$134.0 billion) versus a deficit of $136.7 billion for November 2016.The Treasury Budget data is not seasonally adjusted, so the November deficit cannot be compared to the $63.2 billion deficit registered in October.

Author: Heng V. Mony
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