Wall Street climbed on Tuesday as telecom stalwarts AT&T and Verizon gained and bank shares added to their torrid post-election rally, helping the Dow set another record closing high.
The S&P financial sector rose nearly 1 per cent, lifted by a 2.2 per cent gain for Wells Fargo. The bank’s chief executive told an investor conference it will see a near-term profit hit because of the sharp rise in interest rates, but will benefit in the longer term from rising rates.
Bank of America, Citigroup and Goldman Sachs also ended higher.
Financials have climbed more than 15 per cent since the November 8 election and are seen as one of the sectors particularly benefiting as President-elect Donald Trump seeks to pass economic stimulus and reduce corporate taxes and regulations.
Meanwhile, the Federal Reserve is widely expected to raise interest rates next week, in another boost for banks.
Financials in general are “benefiting from the feeling that interest rates are done going down and we are going to see a much more favourable interest rate and spread environment for financials,” said Paul Nolte, portfolio manager at KingsviewAsset Management in Chicago.
The Dow Jones industrial average rose 35.54 points, or 0.18 per cent, to 19,251.78, the S&P 500 gained 7.52 points, or 0.34 per cent, to 2,212.23 and the Nasdaq Composite added 24.11 points, or 0.45 per cent, to 5,333.00.
Equities are also gaining support from recent positive economic data and corporate results from S&P 500 companies,which in the third quarter were poised to snap a streak of quarterly profit declines, said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.
“It looks like we are leaving the earnings recession and we have entered a period of earnings growth that I think can support the higher prices that we’re seeing,” Carlson said.
AT&T shares rose 1.9 per cent. The company said its new streaming television service DirectTV Now has so far exceeded expectations.
Verizon shares climbed 1.2 per cent. The No. 1 US wireless carrier is selling 29 data centers to Equinix for $3.6billion.
Verizon also helped boost the Dow, which has outperformed other major indexes and notched a series of fresh record highs since the election as investors pile into financials and industrial stocks.
Trump’s market influence was seen on Tuesday as Boeing shares fell after he tweeted that the government should cancel an order with the plane maker to develop a revamped AirForce One. Boeing shares recovered initial losses and ended marginally positive.
Trump’s announcement that Japanese telecoms and internet firm SoftBank agreed to invest $50 billion in the United States also rippled through markets, with Sprint shares rising 1.5 per cent and T-Mobile gaining 1.8 per cent.
In other corporate news, Nike fell 2.5 per cent after Cowen & Co downgraded the shoe and apparel maker’s shares to “market perform’’.
About 7.1 billion shares changed hands in US exchanges, below the 7.9 billion daily average over the last 20 sessions.
Advancing issues outnumbered declining ones on the NYSE by a2.45-to-1 ratio; on Nasdaq, a 1.97-to-1 ratio favoured advancers.
The S&P 500 posted 41 new 52-week highs and four new lows; the Nasdaq Composite recorded 294 new highs and 21 new lows.