S&P 500 keeps climbing as calm continues to reign for stocks

NEW YORK – Stocks around the world keep climbing in the new year, and the Standard & Poor’s 500 index added to its record high as calm continues to reign over markets.

Health care stocks and banks led the way. Their gains overshadowed weakness in telecoms and other dividend-paying stocks, which fell after the yield on the 10-year Treasury climbed back above 2.50 per cent.

KEEPING SCORE: The S&P 500 rose 8 points, or 0.3 per cent, to 2,756 as of 3 p.m. Eastern time. If the gain holds through the end of trading, the index would match its longest winning streak to start a year since 2010, at six days.

The Dow Jones industrial average rose 130 points, or 0.5 per cent, to 25,413, the Nasdaq composite rose 18 points, or 0.3 per cent, to 7,175 and the Russell 2000 index of small-cap stocks gained 2, or 0.2 per cent, to 1,564.

HEALTHY GAINS: Health care stocks rose 1.2 per cent for the biggest gains among the 11 sectors that make up the S&P 500.

Boston Scientific was at the front of the pack after it gave preliminary results for its revenue last quarter, which were stronger than Wall Street was expecting. The medical device company’s shares rose $2.04, or 7.9 per cent, to $27.85.

Illumina likewise reported preliminary results for fourth-quarter revenue that easily topped analysts’ expectations. Shares of the company, which makes tools for genetic analysis, jumped $15.59, or 6.9 per cent, to $2442.65.

FOLLOWING THE MOMENTUM: Stocks have been steadily rising for more than a year as investors bask in an economy where countries around the world are finally growing in sync. Corporate profits are also on the upswing, and the recently passed tax cut should goose earnings even higher.

The powerful combination has not only pushed stocks higher, it’s helped keep the market remarkably calm with hardly any sharp drops. It’s also raised optimism on Wall Street, even though professional investors acknowledge that the market has grown more expensive than usual, relative to corporate profits.

“I would like to say that there’s something onerous coming, just because it would be different from what everyone is talking about,” said Nate Thooft, senior portfolio manager at Manulife Asset Management. But he said he expects to see the market continuing to glide higher.

When a drop does come, Thooft said he sees it as being shallow and short-lived, like past ones have been. Anyone who has followed the strategy to “buy the dips” has been rewarded, as stocks have gone on to recover from every wobble. “Time and time again, they’ve been buying opportunities, and I don’t see what’s changed here.”

UPCOMING EARNINGS SEASON: Companies are set to begin reporting their results for the last three months of 2017, and the pace will pick up later this week.

Investors, though, are more interested about what CEOs will say about Washington’s overhaul of the tax system last month will do to their bottom lines.

Strategists at Goldman Sachs say the tax changes will account for more than a third of the expected 14 per cent growth they’re forecasting for S&P 500 earnings per share in 2018.

SEASON’S GREETINGS: Target became the latest retailer to say it enjoyed a strong holiday season, and it raised its profit forecast for the year. The company also credited lower tax rates for the brighter outlook.

Target rose $2.16, or 3.2 per cent, to $69.34.

DIVIDENDS DULLED: Telecoms, utilities and real-estate stocks lagged well behind the market. They offer some of the market’s biggest dividend yields, which means their stocks often move in the opposite direction of bond yields.

The yield on the 10-year Treasury note rose to 2.53 per cent from 2.48 per cent late Monday and reached its highest level since March. That raises bonds’ appeal relative to dividend-paying stocks for investors seeking income.

Telecom stocks in the S&P 500 fell 1.3 per cent, the worst performance in the index. Real-estate stocks lost 1 per cent, and utilities dropped 0.8 per cent.

FINE FINANCIALS: On the opposite end, rising interest rates help banks because they can lead to bigger profits from making loans. Financial stocks in the S&P 500 climbed 1 per cent.

MARKETS ABROAD: Japan’s Nikkei 225 added 0.6 per cent, Hong Kong’s Hang Seng rose 0.4 per cent and the Shanghai Composite inched up 0.1 per cent. South Korea’s Kospi lost 0.1 per cent.

The CAC 40 in France rose 0.7 per cent, the DAX in Germany rose 0.1 per cent and the FTSE 100 in London gained 0.4 per cent.

CURRENCIES: The dollar fell to 112.59 Japanese yen from 113.07 yen late Monday. The euro fell to $1.1934 from $1.1965, and the British pound dipped to $1.3534 from $1.3564.

COMMODITIES: Benchmark U.S. crude oil rose $1.23 to settle at $62.96 per barrel. Brent crude, the international standard, rose $1.04 to settle at $68.82 per barrel.

Natural gas gained 9 cents to $2.92 per 1,000 cubic feet, heating oil rose 2 cents to $2.07 per gallon and wholesale gasoline climbed 4 cents to $1.84 per gallon.

Gold fell $6.70 to settle at $1,313.70 per ounce, silver dropped 13 cents to $17.01 per ounce and copper slipped a penny to $3.22 per pound.