Published: Wed, July 13, 2016
Research | By Jennifer Evans

Stocks Rising in Afternoon Trading as Dow Hits Record High

The stock market hit another milestone as the Dow Jones industrial average closed at a record high, a day after the Standard & Poor's 500 index did. The index, which is heavily weighted with technology and biotech stocks, erased its losses for the year on Tuesday.

Aluminum maker Alcoa kicked off the second quarter earnings season on a positive note by reporting revenue and earnings that beat Wall Street expectations. Oil markets failed to catch a bid on the broad improvement in risk sentiment, however, with their prices falling more than 1 percent to two-month lows on Monday.Their recovery early this year has stalled on a barrage of factors including disappointing drawdowns in US crude and gasoline, rising USA oil drilling rig count and cuts in bullish hedge fund bets on crude to four-month lows.Brent crude futures fell 0.3 percent in early Asian trade to $46.11 per barrel, near Monday's two-month low of $45.90.

"What is driving the market today is political stability in both Japan and the United Kingdom and a global drive for yield, which central banks are going to support", said John Brady, a senior vice president at R.J. Eastern time. That is just 11 points below its previous high reached in May past year.

Stocks have overcome worries about an economic slowdown in the US and China, Federal Reserve interest rate hike plans, volatile oil prices and a vote by the United Kingdom to exit the European Union. "But we need to see some supporting earnings growth to accompany this move". The Dow closed up 120.74 points or 0.7 percent at 18,347.67, the Nasdaq climbed 34.18 points or 0.7 percent to 5,022.82 and the S&P 500 advanced 14.98 points or 0.7 percent to 2,152.14.

The S&P 500 Index (SPX - 2,152.14) reached an all-time best of 2,155.40, before settling on a 15-point, or 0.7%, lead. The S&P 500 Index (NYSEARCA:SPY) reached new highs, climbing 0.7% to 2,152.14.

Energy was the best performing sector with a 2.25% advance on the back of almost 5% gains in crude futures prices.

Yields rose as expectations of new stimulus in Japan boosted stocks and reduced demand for safe haven bonds, and ahead of the Treasury Department's auction of $20 billion in 10-year notes.

Northland Power added almost 7 per cent, Crescent Point Energy gained more than 4 per cent, and Canadian Natural Resources was up almost 4 per cent.

Shortly after Wall Street opened, the Dow Jones Industrial Average was up 86.1 points, or 0.47 per cent, at 18,313.03.

The increase by the price of crude oil came on the heels of a recent pullback, which dragged the price down to its lowest levels in two months.

In oil, August West Texas Intermediate Crude added US$2.04, or 4.56%, to close at US$46.80/barrel while September Brent gained US$2.22, or 4.80%, to end at US$48.47/barrel. "Typically, a 10 percent move for the entire year is considered normal".

"Some of the uncertainty, "flight-to-quality" type of unknown bid is leaving the markets", said Tom Tucci, head of Treasuries trading at CIBC in NY.

U.S. Treasurys fell under broad-based selling pressure, with the 10-year yield ending higher by 7 bps at 1.51%. Gold posted its biggest one-day fall in three weeks.

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