Stocks rise as S&P 500 aims for fourth straight record

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Stock indexes edged higher again Tuesday after all three major indexes scored records Monday in the wake of Friday’s preliminary U.S.-China trade announcement.

What are major indexes doing?
The Dow Jones Industrial Average DJIA, +0.26% rose 57 points, or 0.2% to 28,295, while the S&P 500 index SPX, +0.12% gained 4 points, or 0.1%, trade at 3,195 and the Nasdaq Composite Index COMP, +0.07% gained 3 points, or less than 0.1%, at 8,816.

The S&P 500 set a new intraday high early Tuesday.

On Monday, the Dow rallied 100.51 points, or 0.4%, to end at 28,235.89, and the S&P 500 advanced 22.65 points, or 0.7%, to finish at 3,191.45. The Nasdaq Composite finished at 8,814.23, a gain of 79.35 points, or 0.9%.

What’s driving the market?
Stocks traded higher Tuesday after the S&P 500 and Nasdaq indexes logged their third straight record closes the day before, while the Dow saw its first record finish since Nov. 27 as equities rose in quiet trade following the announcement late last week of a partial, or “phase-one,” U.S.-China trade deal.

Helping maintain bullish momentum was housing and industrial production data that showed these areas of the U.S. economy accelerating in November. Home builders increased new construction at an annual pace of 1.365 million in November, an increase of 3.2% from October’s pace and above the 1.356 million expected by economists polled by MarketWatch.

Data on U.S. November industrial production and capacity utilization showed a 1.1% increase in November, the largest monthly increase in two years, after the end of the General Motors GM, +0.32% strike, but below the 1.2% rise expected by economists.

And job openings rose to 7.3 million in October from about 7 million in September, though below the 7.6 million openings last year. The rate at which Americans quit their jobs held steady at 2.3%.

“Housing has been on a tear,” Mike Loewengart, vice president of investment strategy at E-Trade said in a email. “Home builder sentiment reached 20-year highs yesterday and housing starts and building permits far exceeded expectations this morning. Housing is an economic bellwether and its recent strength is further encouraged by the strength we’ve seen in manufacturing as those two industries are typically related.”

Some on Wall Street worried that trade optimism could be on the wane however, as the deal announced to the public was light on specifics. “US stocks could start feeling trade optimism fatigue as we near the holidays,” wrote Edward Moya, senior market analyst at Oanda, in a note.

“Expectations are now for the US and China to finalize the phase-one deal in the first week of January. As lawyers review the text, it seems this deadline could get pushed even further as not all the terms have been agreed upon,” he added. “President Trump wants talks to begin for the phase-two deal, but that does not seem on anyone’s radar.”

The U.S. says China agreed to increase imports of goods in 2020 and 2021 by a total of $200 billion more than the total in 2017, including about $40 billion of U.S. farm goods. The deal also includes Chinese action to protect American intellectual property and vague assurances not to manipulate its currency.

Meanwhile, U.S. Congressional negotiators agreed a $1.3 trillion federal spending deal Monday. Congress is expected to pass the legislation this week ahead of Friday’s government shutdown deadline.

Some underlying support for stocks was also tied to last Thursday’s U.K. election, which saw the Conservative party led by Prime Minister Boris Johnson score a decisive victory, which soothed fears the country could leave the European Union without a trade deal in place. Those worries were revived Tuesday, however, after Johnson signaled he would rule out any extension of an end-of-2020 deadline for reaching agreement on an EU-U.K. trade deal.

European equities were lower, with the U.K.’s FTSE 100 UKX, +0.08% off 1%.

What companies are in focus?
Shares of Dow component Boeing Co. BA, +0.39% were up 0.1% after confirming late Monday it would suspend production of its 737 MAX jetliner. Boeing shares slumped more than 4% on Monday after The Wall Street Journal reported the company was considering such a move.

Shares of Eli Lilly & Co. LLY, +2.99% rose 2.3% after the drugmaker provided an upbeat financial outlook for the year ahead.

Shares of Bed Bath & Beyond BBBY, +9.36% might also be in focus after the company said six senior executives, including its chief merchandising officer and chief marketing officer, will depart ahead of the announcement of a new plan by Chief Executive Mark Tritton in early 2020. Shares gained 5.2% Tuesday.

Navistar International Corp. NAV, -8.25% reported a decline in fiscal fourth-quarter net earnings and revenue that fell more than analysts expected, while providing a downbeat outlook for 2020 on Tuesday morning. Shares were down 7.5% Tuesday.

Shares of Micron Technology Inc. MU, +0.38% rose 0.2% Tuesday after Wedbush Securities analyst Matt Bryson upgraded the stock to outperform from neutral, one day after a Susquehanna raised its rating on the stock.

Apple AAPL, +0.37% shares rose 0.5%, even after Rosenblatt Securities estimated total sales in China were down 30% in November on a year-over-year basis.

How are other markets trading?
The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, -0.09% fell 1.7 basis points to 1.873% Tuesday, after rising 7 basis points Monday.

Crude-oil prices were on the rise Tuesday, with West Texas Intermediate crude CLF20, +1.11% for January delivery rising 57 cents, or 1% to $60.78 a barrel on the New York Mercantile Exchange. In precious metals, the price of an ounce of gold for February delivery GCG20, -0.03% lost 90 cents to trade at $1479.60 an ounce on Comex.

The value of the U.S. dollar edged higher relative to a basket its major trading partners, with the ICE U.S. Dollar index DXY, +0.17% gaining 0.1%.

In Asia overnight, stocks closed higher, with the China CSI 300 000300, +1.36% rising 1.4%, Hong Kong’s Hang Seng Index HSI, +1.22% advancing 1.2% and Japan’s Nikkei 225 NIK, +0.47% gaining 0.5%.

MarketWatch