The US’ three main indices closed at record highs on Friday, helped by gains in consumer staples and technology stocks as investors hunted for bargains in a post-election rally.
The stock markets closed early for Black Friday, while trading volumes were thin.
The three major indices closed higher for the third week in a row, extending their rally since the US election. The S&P 500 marked its seventh record close since Nov. 8.
Photo: Reuters
However, the defensive consumer staples and utilities sectors have been the worst performers in that period.
The consumer staples sector gave the S&P 500 the biggest boost on Friday, closing up 0.79 percent, led by gains in Procter & Gamble and Coca-Cola.
“People are looking for value in the market. While many stocks have risen quite briskly, investors are looking for some forgotten names in the rally,” said Andre Bakhos, managing director at Janlyn Capital in Bernardsville, New Jersey.
“These orphaned stocks are being hunted today,” he said.
The Dow Jones Industrial Average rose 68.96 points, or 0.36 percent, to 19,152.14.
The S&P 500 gained 8.63 points, or 0.39 percent, to 2,213.35, and the NASDAQ Composite added 18.24 points, or 0.34 percent, to 5,398.92.
For the week, the Dow and the NASDAQ gained 1.5 percent and the S&P 500 gained 1.4 percent.
Ten of the 11 major S&P sectors closed higher on Friday, led by a 1.43 percent rise in utilities.
The tech sector rose 0.37 percent, boosted by Cisco and Apple.
The energy sector was the only group in the S&P to decline, falling 0.39 percent after oil dropped when Saudi Arabia pulled out of talks with non-OPEC nations, including Russia.
“This has been a violent shift up, animal spirits are dancing,” said Humberto Garcia, head of asset allocation at Leumi Investment Services in New York. “There is a lot of optimism that tax reform will lead to growth.”
On Wednesday, the Dow closed above 19,080 for the first time, while the S&P 500 extended its first monthly gain since July and the Russell 2000 Index rallied for a 14th straight day to add to its record.
Investors are betting US president-elect Donald Trump’s pledges to boost fiscal spending and cut taxes will lift firms that benefit from a stronger economy.
“We’re still seeing money coming out of bond funds and into stock funds and it’s interesting the perspective investors are taking,” said Eric Wiegand, senior portfolio manager at the Private Client Reserve of US Bank in New York, which oversees US$128 billion. “To sustain any meaningful advances from here, we need to see earnings growth. The big watch will be for inflation expectations because that tends to be a bit of a weight on market multiples.”
Traders are also pricing in a 100 percent chance that the US Federal Reserve will raise interest rates next month, compared with a 68 percent probability at the start of this month.
US companies recently ended a five-quarter drop in profits, and next week’s reports on GDP, payrolls and manufacturing will offer further clues on the strength of the recovery.
“The kind of valuation you’re seeing are not justified by corporate profits,” Leumi’s Garcia said. “It makes sense to have some precaution.”
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