By Sue Chang and Mark DeCambre, MarketWatch
Russell 2000, Dow transports sets records
U.S. stocks closed higher for a fourth session Tuesday with the
S&P 500 notching an intraday record on the back of optimism
over U.S.-China trade talks against the backdrop of a healthy
economy and solid corporate earnings. The gains come on the day
stocks tie a record for the longest bull market in history.
How did the main benchmarks fare?
The Dow Jones Industrial Average rose 63.60 points, or 0.3%, to
end at 25,822.29. The S&P 500 index advanced 5.91 points, or
0.2%, to 2,862.96 after touching an intraday high of 2,873.23. The
finish left the S&P 500 just 0.3% off the record close of
2,872.87 notched on Jan. 26. The Nasdaq Composite Index climbed
38.17 points, or 0.5%, to 7,859.17.
The Nasdaq is around 0.9% from its record close, while the Dow
is 3% below its own.
The Dow Jones Transportation Average gained 0.7% to 11,436.36,
after carving out an intraday peak at 11,475.40, marking the
gauge's first record high since Jan. 16, while the
small-capitalization Russell 2000 index rallied 1.1% to 1,718.05
after setting an intraday record of 1,722.29.
Don't miss:Stocks may be finally about to break out of this
trading range
(http://www.marketwatch.com/story/stocks-may-be-finally-about-to-break-out-of-this-trading-range-2018-08-20)
What drove the market?
With the second-quarter earnings season essentially over and no
economic data on tap, investors are turning their attention to news
from the Federal Reserve. The minutes from the central bank's
latest meeting will be released on Wednesday, and on Friday, Fed
Chairman Jerome Powell will give a speech at the Kansas City Fed's
annual summer retreat in Jackson Hole, Wyo.
Both the minutes and the speech will be scoured for any insight
(http://www.marketwatch.com/story/feds-powell-may-use-jackson-hole-speech-to-discuss-potential-trouble-ahead-2018-08-17)
into what the Fed sees as potential problem spots for the economy.
In particular, market participants will be looking to hear Powell's
thoughts on trade policy and whether the currency crisis in Turkey
could spread to other emerging markets or regions--as well as for
any clues into the Fed's policy plan on interest rates.
Don't miss:Here's how Jackson Hole could impact the dollar,
bonds and emerging markets
(http://www.marketwatch.com/story/heres-how-the-jackson-hole-gathering-may-influence-the-dollar-bonds-and-emerging-markets-2018-08-20)
The speech could take on some political overtones this year,
after President Donald Trump again criticized Powell
(http://www.marketwatch.com/story/trump-ramps-up-criticism-of-powell-reports-2018-08-20)
and the Fed. Trump said he was "not thrilled" with the Fed
chairman, who he had appointed to replace Janet Yellen, and that he
expected "more help" from the central bank. Reuters reported that
Trump said he would continue criticizing the Fed should it continue
to raise short-term interest rates, which the central bank has
indicated it will do at a steady clip.
This isn't the first time Trump has called out the Fed for
raising rates. When he did so in July, Powell stressed that the Fed
operated independently of political considerations.
Separately, investors are continuing to monitor trade relations
between the U.S. and its major trading partners, with talks between
the U.S. and China set to resume on Wednesday. While market
participants are optimistic that progress could be made in the
talks--potentially averting a trade war, which most analysts said
would be a massive headwind for global economic growth--few expect
the issue to be resolved.
On Monday, Trump told Reuters that he has "no time frame"
(http://www.marketwatch.com/story/trump-wary-of-perjury-trap-says-he-could-intervene-in-mueller-probe-2018-08-20)
for ending the trade dispute, and that he didn't "expect much" from
the talks. His administration is also moving forward with tariffs
(http://www.marketwatch.com/story/even-with-trade-talks-on-tap-us-moves-forward-on-new-tariffs-against-china-2018-08-20)
that cover $200 billion in Chinese goods.
Meanwhile, the bull market in stocks on Wednesday is due to
become the longest bull market on record, from the March 9, 2009
low of the financial crisis which many consider the birth date of
the current bull.
Read:This bull market in U.S. stocks stands just a day away from
the history books
(http://www.marketwatch.com/story/the-stock-market-is-about-to-make-history-2018-08-14)
What were analysts saying?
Chris Zaccarelli, chief investment officer at Independent
Advisor Alliance, said the S&P 500 setting an intraday high is
a sign that confidence in the market has been restored but worries
over U.S.-China trade tensions are likely to contribute to mounting
volatility until these issues are resolved.
"I think that this is optimism on at least some partial
resolution of the trade negotiations as investors are expecting
progress [on that front]," said Kate Warne, investment strategist
at Edward Jones, referring to the market's recent rise.
"If we reach new highs that's great but I think it would be a
reflection of the positive underlying fundamentals of very positive
earnings growth and modest interest rates," Warne said.
What stocks were in focus?
Toll Brothers Inc. (TOL) jumped 14% after it reported its
third-quarter results (http://www.marketwatch.com/discover) and
gave a full-year sales outlook.
Coty Inc.(COTY) sank 7.1% after it reported fourth-quarter
revenue that missed expectations
(http://www.marketwatch.com/story/coty-shares-slide-33-premarket-after-revenue-miss-2018-08-21),
although its adjusted profits topped forecasts by a penny a
share.
Medtronic PLC (MDT) gained 5.7%. The medical device company
posted first-quarter earnings and revenue that beat expectations
(http://www.marketwatch.com/story/medtronics-stock-rallies-after-earnings-revenue-beat-expectations-2018-08-21).
It also raised its organic full-year revenue outlook.
Kohl's Corp. (KSS) shares rose 1.7% after the retailer reported
adjusted second-quarter earnings that beat expectations, along with
revenue that was ahead of forecasts. It also raised its full-year
adjusted profit view.
J.M. Smucker(SJM) reported adjusted first-quarter earnings that
beat expectations but its shares fell 6.6%.
Shares of discount brokers slumped after a report that JPMorgan
Chase & Co. (JPM) was planning to launch a new digital
brokerage service that comes with free trades. TD Ameritrade
Holding Corp.'s stock (AMTD) tumbled 7.1%, Charles Schwab Corp.
(SCHW) shed 2.4% and E-Trade Financial Corp.'s stock (ETFC) slid
4.4%. J.P. Morgan's stock, meanwhile, gained 0.6%.
What were other markets doing?
European stocks ended mostly higher
(http://www.marketwatch.com/story/european-markets-flat-but-bhp-falls-after-results-2018-08-21)
with the exception of the U.K.'s FTSE and Asian markets all rose
(http://www.marketwatch.com/story/asian-stocks-mixed-nikkei-down-slightly-as-dollar-sags-2018-08-20)
except for Australian stocks.
Oil futures gained for a fourth straight day,
(http://www.marketwatch.com/story/oil-set-for-4th-straight-gain-as-investors-watch-iranian-sanctions-2018-08-21)
while gold settled higher
(http://www.marketwatch.com/story/gold-tries-to-push-back-above-1200-with-back-to-back-gains-2018-08-21)
and the ICE U.S. Dollar Index slid 0.7%.
--Ryan Vlastelica contributed to this report
(END) Dow Jones Newswires
August 21, 2018 16:39 ET (20:39 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.