May 26, 2017

S.&P. 500 Hits Record in Quiet Trading

The stock market showed little change in quiet trading as the Standard Poor’s 500-stock index reached another nominal record high.

The financial sector rallied after Bank of America and MBIA, the troubled bond insurer, reached a settlement of their long legal dispute over mortgage-backed securities.

A jump in Apple’s shares helped lift the S. P. 500 and the Nasdaq composite index modestly. But the Dow Jones industrial average bucked the trend, ending marginally lower.

The day’s slight gains followed a strong run in stocks this year. The market has been lifted by the Federal Reserve’s monetary stimulus policy, which has kept interest rates low, and solid earnings. The S. P. 500 has gained 13.4 percent this year.

“As long as you continue to have decent earnings reports and the support from central banks around the world providing liquidity, it’s going to be hard to derail this market, at least in the short term,” said Michael James, managing director of equity trading at Wedbush Securities.

On Monday, Bank of America said it would settle claims with MBIA for $1.7 billion, lifting shares of both companies and the S. P. financial sector index, which gained 1 percent. MBIA shares jumped 45.4 percent to $14.29 and Bank of America shares rose 5.2 percent to $12.88.

Apple was among the top gainers after Barclays raised its price target on the stock. Apple’s shares shot up 2.4 percent to $460.71.

The Dow industrials dipped 5.07 points, to close at 14,968.89. The S. P. 500 inched up 3.08 points, or 0.19 percent, to 1,617.50. The Nasdaq gained 14.34 points, or 0.42 percent, to close at 3,392.97.

Although weak economic data from the euro zone and China has caused concerns about the outlook for global growth, the stronger-than-expected April employment report fueled gains that sent the Dow and the S. P. 500 to new nominal record levels last Friday.

The multibillionaire investor Warren E. Buffett said on Monday that stocks were “reasonably priced,” although the Dow and the S. P. 500 had hit nominal highs. But he also said low interest rates had made bonds “terrible” investments because their prices would fall when rates eventually rise.

But some analysts say they suspect the stock rally has little strength to continue.

The market “is discounting a tremendous amount of good news now, which I don’t think is going to be substantiated, and I don’t think it’s allowing for any possibility of bad news,” said Uri Landesman, president of Platinum Partners.

Earnings have been mostly higher than expected, with 68.5 percent of companies surpassing estimates. At the same time, second-quarter estimates have fallen as outlooks remain more negative than positive.

On Monday, shares of Tyson Foods dropped 3.3 percent to $24.10 after the company posted a weaker-than-expected quarterly profit and cut its full-year sales forecast.

In contrast, Humana jumped 2.1 percent to $75.49, making it one of the S. P. 500’s biggest percentage gainers. JPMorgan Chase upgraded the stock to overweight.

But Johnson Johnson’s shares slid 1.3 percent to $84.68. General Motors’ stock also declined, falling 0.9 percent, to $31.82, after the Treasury said it would begin another round of sales of G.M. stock acquired during the government’s bailout of the auto industry.

In the bond market, interest rates rose again on Monday after their surge last Friday following the strong April employment report. The price of the Treasury’s 10-year note fell 22/32, to 102 4/32, while its yield rose to 1.76 percent, from 1.74 percent on Friday.

Article source: http://www.nytimes.com/2013/05/07/business/daily-stock-market-activity.html?partner=rss&emc=rss

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