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MAY 16, 2018 / 6:00 pm
Wall St. gains as small-cap Russell 2000 hits record
DJ: 24,768.93 +62.52 NAS: 7,398.30 +46.67 S&P: 2,722.46
+11.01 5/16
(Reuters) - Retail and
technology stocks led Wall Street higher on Wednesday and the small-cap Russell
2000 hit a record peak, even as a rise in U.S. bond yields to an almost
seven-year high suggested more competition for equities and investors fretted
over geopolitics. Smaller companies
continued this year’s trend of outperforming their larger rivals with the
Russell 2000 reaching a record high. The index ended up 1 percent.
“Small caps present a
cleaner play than large caps on two fundamental market drivers: lower corporate
taxes and a stronger US economy,”
research firm DataTrek wrote in its morning briefing.
Macy’s Inc (M.N) shares advanced 10.8 percent after the department store
operator reported results that beat analyst estimates and the company raised
its profit outlook. The results also boosted shares
of rival department stores J.C. Penney Co Inc (JCP.N), Kohl’s Corp (KSS.N), Nordstrom Inc (JWN.N) and Target Corp (TGT.N). The S&P 500 Department Store index
.SPLRCRETD gained 5.2 percent,
its largest daily jump in nearly six months.
“I think corporate earnings have been remarkably strong,” said
David Carter, chief investment officer at Lenox Wealth Advisors in New York.
“The concern is really more about the future and decelerating growth.” Macy’s earnings pushed the consumer
discretionary sector higher, a day after government data showing an
acceleration of consumer spending fanned inflation concerns and helped send
U.S. government bond yields higher.
Yields on 10-year U.S. Treasuries hit 3.10 percent for the first time since July 2011,
continuing to pressure
stocks as investors consider whether U.S. government bonds pose a more attractive
option to riskier equities. “As
yields go up, they start to be a little bit more
competitive with risk assets and with stocks in particular,” said Katie Nixon,
chief investment officer for the wealth management division of Northern Trust
in Chicago.
Weeks of diplomatic
progress were thrown into doubt
when North Korea postponed high-level talks with Seoul and threatened to pull
out of its historic meeting with the United States. The uncertainty compounded investor jitters ahead of United
States-China trade negotiations. “The
general consensus seems to be we’ll come to some sort of trade agreement,”
Carter said. “But it may be choppy until we get there.”
The
Dow Jones Industrial Average .DJI rose 62.52 points, or 0.25 percent, to
24,768.93, the S&P 500 .SPX gained 11.01 points, or 0.41 percent, to
2,722.46, and the Nasdaq Composite .IXIC added 46.67 points, or 0.63 percent, to
7,398.30. Of the 11 major sectors of the S&P 500,
only rate-sensitive utilities .SPLRCU and real estate .SPLRCR stocks closed in negative territory. The tech sector .SPLRCT rose 0.4 percent, and
gave the S&P 500 its biggest boost among the major sectors.
Micron
Technology Inc (MU.O) rose 4.6 percent after RBC Capital Markets
initiated coverage of the chipmaker with an “outperform” rating. The
Philadelphia SE semiconductor
index .SOX was up
1.4 percent. Facebook Inc (FB.O) shares were the biggest drag on the
S&P 500, closing down
0.6 percent, on news that Chief Executive Mark Zuckerberg would appear
before members of the European Parliament to answer questions about the
improper use of users’ data. 3M Co (MMM.N) weighed the most on the Dow, slipping 1.1 percent
after Jefferies downgraded the stock to “hold.”
Advancing issues outnumbered declining ones on the NYSE by a
1.92-to-1 ratio; on Nasdaq, a 1.95-to-1 ratio favored advancers. The S&P 500 posted 15 new 52-week highs
and three new lows; the Nasdaq Composite recorded 128 new highs and 48 new
lows.
Volume on U.S. exchanges
was 6.22 billion shares,
compared to the 6.66 billion average for the full session over the last 20
trading days.
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