By Michael Wursthorn and Lauren Almeida
The Dow Jones Industrial Average closed at a record on
Wednesday, its first new high in nine months, as the index notched
its fourth straight session of gains.
The Dow industrials climbed more than 170 points during a
shortened trading session ahead of Thursday's Independence Day
holiday, putting it above its previous October milestone. The Dow
was the last of the three major indexes to notch a record this
year, as trade tensions, concerns of slowing economic growth and
problems among individual companies such as Boeing and 3M weighed
on its performance in recent months.
Last weekend's trade truce spurred the latest leg of the Dow's
recovery after the U.S. and China reached a pact that eased
investors' fears of an all-out trade war between the world's two
biggest economies. But the cease-fire only put additional tariffs
on hold indefinitely, leaving investors concerned that lingering
frictions could give way to another flare-up in trade tensions and
market volatility.
Eyes are now turned to the Federal Reserve and whether it will
cut interest rates this year -- a move that would support further
stock gains, analysts said.
The yield on the benchmark U.S. Treasury 10-year note has fallen
to multiyear lows as investors have priced in Fed rate cuts. The
yield was recently at 1.953%, down from 2.684% at the end of last
year.
Investors largely expect the central bank to slash rates at one
of its coming meetings, according to CME Group data. Weakening
economic figures, including slowing U.S. factory activity and a
pullback in hiring activity, help support such a move, as do trade
tensions, analysts said. Although it remains unclear if the trade
truce will affect the Fed's decision, money managers say the June
jobs report, due Friday after the holiday, will also factor into
the central bank's thinking.
"If the data is such that the central bank doesn't need to move
aggressively, investors will likely be disappointed," said Jim
Baird, chief investment officer at Plante Moran Financial Advisors.
"Any hint that the Fed may not cut rates will be a catalyst for
more volatility."
On Wednesday, shares of McDonald's led the Dow industrials
higher, followed by Procter & Gamble and Johnson & Johnson,
helping lift the index 179.32 points, or 0.7%, to 26966. That tops
its previous record of 26828.39, set Oct. 3.
The Dow had previously topped that mark in intraday trading last
month and again Monday, but it fell back below the record before
markets closed. Altogether, the Dow took 188 trading sessions to
reach its latest record, its longest drought since the 290-session
stretch from May 2015 through July 2016.
Several Dow heavyweights struggled through the first half of the
year, holding the index back, while broader market gains pushed the
S&P 500 and Nasdaq higher. Among the biggest drags on the
price-weighted Dow last quarter were shares of 3M, which reported a
big sales miss in April, and aerospace giant Boeing, which stumbled
amid issues with its 737 MAX line of jets.
The S&P 500 and Nasdaq clinched their first records of the
year in April. The benchmarks have hit several more since then,
including on Wednesday.
The S&P 500 added 22.81 points, or 0.8%, to 2995.82,
notching its eighth milestone of the year, while the Nasdaq rose
61.14 points, or 0.8%, to 8170.23, its fifth record this year.
Shares of Symantec led the S&P 500 higher, gaining $3, or
14%, to $25.10, its biggest gain in nearly 18 years, after reports
it had drawn takeover interest from Broadcom, which declined
$10.44, or 3.5%, to $284.89. Real-estate and consumer-staple
stocks, meanwhile, notched the biggest gains, rising 1.5% and 1.4%,
respectively, while shares of utilities added 0.8%.
Tesla rose $10.35, or 4.6%, to $234.90 after the car maker said
Tuesday it had delivered a record 95,200 vehicles in its latest
quarter. Its shares remain down 29% for the year.
Elsewhere, the Stoxx Europe 600 added 0.9%, its fifth
consecutive gain, as shares of travel companies and food and
beverage firms pushed the pan-European benchmark higher.
Asian stock markets, meanwhile, fell. South Korea's Kospi
declined 1.2% after the country lowered growth and inflation
forecasts, while the Shanghai Composite and Hong Kong's Hang Seng
shed 0.9% and 0.1%, respectively.
Write to Michael Wursthorn at Michael.Wursthorn@wsj.com
(END) Dow Jones Newswires
July 03, 2019 14:12 ET (18:12 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.