Dow hits new high, S&P 500 builds on all-time record
Wall Street extended its record-setting ways Tuesday as the Dow joined the S&P 500 in taking out its 2015 all-time high and carving into previously untouched territory.
All three major indexes gained 0.7% apiece, as the Dow jumped 121 points to a new all-time closing high and the S&P 500 built upon its record close notched Monday. The blue chips now stand at 18,347.67, about 35 points above the previous record set May 19, 2015.
The new mark for the S&P 500 is 2,152.14, a 15-point improvement on its Monday close.
Tuesday marked another milestone for the other major gauge, the Nasdaq composite, which climbed into positive territory for 2016 for the first time. The index is still about 3.6% under its record close.
Stocks rode a wave of momentum that gained speed Friday when news of much bigger-than-expected job growth quieted concerns that the surprise 'Brexit' vote would have economic repercussions here.
Stocks hit highs: What's different this time
Stocks have crawled their way back into record territory after beginning 2016 with Wall Street's worst start ever to a year and the S&P 500 has jumped more than 16% since its Feb. 11 closing low. Stocks have overcome worries about an economic slowdown in the U.S. and China, Federal Reserve interest rate hike plans, volatile oil prices and a vote by the United Kingdom to exit the European Union.
"So far 2016 is reminiscent of past stealth bull markets, climbing a wall of worry despite obstacles in its way," Douglas Coté, chief market strategist at Voya Investment Management, told clients in a report.
Looking forward, investors are now shifting their focus to corporate earnings and what companies will say about the outlook for the rest of the year. Alcoa (AA) unofficially kicked off the parade of second-quarter earnings reports after the bell Monday. Shares were up more than 5% Tuesday after the aluminum giant reported better-than-expected results.
Alcoa shares rise on earnings beat
Overall, the news from corporate America is not expected to be good, with analysts estimating S&P 500 company profits will be down 5.2% overall from a year earlier. Cote notes that If in fact earnings are down as expected, it would be the first time since 2009 we have seen five consecutive quarters of year-over-year earnings declines.
But starting in the current third quarter, earnings are expected to finally start improving.
Overseas, European markets were mostly higher as Germany’s DAX rose 1.3% and France’s CAC 40 gained 1.4%. Britain's FTSE 100 was the laggard, falling 0.1%.
Asian stocks rose as Japan's Nikkei 225 index jumped 2.5% to 16,095.65 on hopes of more stimulus measures following the election victory of Prime Minister Shinzo Abe’s ruling party. Hong Kong’s Hang Seng index rose 1.7% to 21,224.74 and the Shanghai composite index jumped 1.8% to 3,049.38.
