Dow, S&P 500 Close at New Record Highs

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After alternating between gains and losses for 14 trading days, the market has moved higher three days in a row. The S&P 500 rose by 1.22% and the Dow was higher by 0.88%. The S&P and Dow closed at new all-time highs.

The minutes from the latest Fed meeting were released sooner than expected. The takeaway from the minutes was that not many participants in the meeting want the Fed to stop or to slow down purchases without proof that improving economic conditions are sustainable. So, if purchases by the Fed slow, it will only be after a backdrop of sustained economic improvement. This was viewed as a positive by the market and things started off strongly in the morning and gained strength all day.

Small cap stocks and technology outperformed blue chips as a rotation into riskier assets took place. In the S&P 500, semiconductors, telecom, equipment, and asset managers were the best performers. Hospitals, materials, utilities, and consumer staples underperformed. 

Commodities lagged today after the sharp spike higher yesterday. Precious metals, copper, crude, and grains trailed the broad market averages. Gold and silver both traded lower by more than 1%. Crude was off 0.38% and natural gas was down 1.77%.

Financials finished higher by more than 1%. Banks, asset managers, and life insurers were the best groups within the sector. REITs trailed the market after seeing aggressive buying in the space on Monday.

Technology was led by the former laggards, the mega-cap issues. Intel, Microsoft, IBM, Qualcomm, and Oracle all traded sharply higher. Microsoft had one of its best two-day runs in years in the wake of positive PC related news and a new product launch in June. Semiconductors were higher by 2%. The theme today was to buy the names in the tech sector that had underperformed the market so far this year.

The "buy the laggards" theme was also evident in the industrial sector today. Many of the leading industrial names had sharp moves higher earlier in the year and have underperformed the market in recent weeks. General Electric moved aggressively higher to close up 2.25%. Aerospace and defense names continue to move higher.  LLL was higher on news they may spin off some of their divisions.

The Transport Index moved ahead of the tape on broad based strength. Investors moved towards rails that have heavy exposure to moving oil out of the domestic shale fields. Truckers and parcels traded ahead of the tape.

Biotech, life sciences, and pharma outperformed the tape today in the healthcare space. Large cap biotech led by Gilead and Amgen posted gains of better than 3%. Pfizer soared better than 2% after their developmental drug for breast cancer received FDA breakthrough designation today.

Source: PFS Group


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