Wall Street surges to new highs; transports set record

Wall Street surged on Wednesday,with the Dow industrials and S&P 500 hitting fresh records, as equities continued their march upward after the election of Donald Trump as US president, and a new high for transportation stocks added to the bullish tone.

All three major indexes finished more than 1 percent higher.

The gains came even as Trump's comments on prescription drug pricing wounded the healthcare sector.

US equities have scaled new highs since the election, with investors encouraged by Trump's plans for economic stimulus and to reduce corporate taxes and regulations.

“I think it's continuation of the view that the new administration will be pro-business,” said Ernie Cecilia, chiefinvestment officer of Bryn Mawr Trust in Bryn Mawr,Pennsylvania.

The Dow Jones industrial average rose 297.84 points,or 1.55 per cent, to 19,549.62, the S&P 500 gained 29.12 points, or 1.32 per cent, to 2,241.35 and the Nasdaq Composite added 60.76 points, or 1.14 per cent, to 5,393.76.

The S&P 500 set a new closing high for the first time since November 25.

The Dow Jones Transport Average rose 2.5 per cent and set new all-time intraday and closing highs, surpassing its prior peaks from late 2014.

A finish above the closing record for the transportation average could indicate further gains as it triggers a bullish sign for some investors who look for parallel performance forboth the Dow industrial and transportation averages.

“You're going to have these (software) programs that are now going to say Dow Theory has been confirmed and they theninitiate buy orders, which creates more fuel for the fire,” saidKen Polcari, director of the NYSE floor division at O'NeilSecurities in New York.

Gains were broad-based with 10 of 11 major sectors inpositive territory.

A $3-billion trading programme to buy a broad spectrum ofstocks also came into the market in the afternoon and “reallyjust sparked this market to move higher and higher,” saidJonathan Corpina, senior managing partner for Meridian EquityPartners, an equity and options broker-dealer in New York.

Telecommunications and real estate,which are high dividend payers, posted the strongest sector gains.

“There's a little bit of a bond market rally going on,certainly in the long end, so that means dividend stocks feel better,” said Brian Battle, director of trading at PerformanceTrust Capital Partners in Chicago.

Traders also pointed to covering of short positions ahead of Thursday's meeting of the European Central Bank as a catalyst driving the market higher.

Trump's victory has been seen as a boon, particularly for financial and industrial stocks that have surged since the election.

But biotechnology and pharmaceutical stocks tumbled on Wednesday after Trump promised in a Time magazine article that"I'm going to bring down drug prices.”

The S&P healthcare fell 0.8 per cent, the only groupin negative territory. The Nasdaq Biotechnology index slumped 2.9 per cent, recovering from steeper losses initiallyafter Trump's comments were publicised.

Trump's effect was seen on Tuesday, as well, with Boeing's stock falling briefly after his tweet that an order for a revamped Air Force One plane should be canceled over high costs.

“I think it is a new fact of life ... that fundamentals canbe swept aside any day by comments from the (President-elect),"said David Donabedian, chief investment officer of AtlanticTrust Private Wealth Management.

About 8.2 billion shares changed hands in US exchanges,above the 8 billion daily average over the last 20 sessions.

Advancing issues outnumbered declining ones on the NYSE by a3.31-to-1 ratio; on Nasdaq, a 1.80-to-1 ratio favored advancers.

The S&P 500 posted 98 new 52-week highs and seven new lows;the Nasdaq Composite recorded 350 new highs and 32 new lows.