S&P 500 blasts through 3,300 as US tech stocks surge

Traders work on the floor at the New York Stock Exchange (NYSE) in New York January 15, 2020. — Reuters pic
Traders work on the floor at the New York Stock Exchange (NYSE) in New York January 15, 2020. — Reuters pic

NEW YORK, Jan 17 — The S&P 500 rallied through the 3,300 mark for the first time yesterday and the other main US indexes also surged to record highs, fuelled by tech stocks, solid retail sales data and upbeat quarterly earnings from Morgan Stanley.

Morgan Stanley jumped 6.6 per cent to lead the S&P 500 after it beat quarterly profit estimates and raised its performance goals, closing out several big US lenders' earnings on a strong note.

Sentiment was further lifted by data that showed US retail sales rose 0.3 per cent in December, in line with economists' estimates.

The retail numbers indicated the US economy maintained a moderate growth pace at the end of 2019 and eased concerns about the sector's health following disappointing holiday sales reports from Target Corp and JC Penney Co Inc.

“The consumer needs to be strong and evidence of that is retail sales, which came in pretty well after some slowing over the last several months,” said Tom Martin, portfolio manager at Globalt in Atlanta.

Technology stocks, which have played an outsized part in the recent rally, made fresh gains. The S&P information technology index added 1.4 per cent to a record high, leading gains among the main sectors. Microsoft Corp rose 1.8 per cent and chipmakers also surged after a strong forecast from top contract chip manufacturer TSMC .

The new highs on Wall Street come after Washington and Beijing on Wednesday signed a deal pausing an 18-month long tariff war that had bruised financial markets and crimped global growth.

China is expected to boost purchases of US goods and services in exchange for the rolling back of some tariffs as part of the deal, but several thorny issues remain unresolved.

Analysts expect profits at S&P 500 companies to have dropped 0.4 per cent in the fourth quarter, but full-year 2020 earnings are estimated to grow 9.6 per cent, according to Refinitiv IBES data. Full-year earnings estimates typically decline as the year advances.

The Russell 2000 index of small-cap stocks jumped 1.36 per cent, its strongest session so far in 2020.

“Small caps this week are starting to act better and gain interest from investors,” said Willie Delwiche, an investment strategist at Baird. “Broad participation in the market is giving people a sense of ease right now that it's not just a handful of companies moving higher.”

The Dow Jones Industrial Average jumped 0.92 per cent to end at 29,297.64 points, while the S&P 500 gained 0.84 per cent to 3,316.89.

The Nasdaq Composite added 1.06 per cent to 9,357.13, bringing its gain in 2020 to 4.29 per cent.

Among other stocks, Signet Jewelers Ltd soared 40 per cent after raising its 2020 adjusted earnings estimate.

Bank of New York Mellon Corp tumbled 7.8 per cent to the bottom of the S&P 500 after the custodian bank missed profit estimates.

Advancing issues outnumbered declining ones on the NYSE by a 2.57-to-1 ratio; on Nasdaq, a 2.78-to-1 ratio favoured advancers.

The S&P 500 posted 100 new 52-week highs and no new low; the Nasdaq Composite recorded 200 new highs and seven new lows.

Volume on US exchanges was 6.9 billion shares, compared with an average of 7.0 billion shares over the last 20 trading days. — Reuters

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