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Major indexes rip to record closing highs as energy spikes 2%

U.S. equities closed higher on Monday, led by energy stocks, as oil prices rose on renewed optimism that OPEC was closing in on a deal to cut production.

"I don't know if it will happen, but the market certainly hopes that it will," said Robert Pavlik, chief market strategist at Boston Private Wealth, referring to a possible OPEC deal.

The three major indexes closed at record highs simultaneously for the first time since this past summer. The Dow Jones industrial average rose around 88 points, surpassing previous closing and intraday records of 18,923.06 and 18,934.05, respectively.

The S&P 500 topped its all-time intraday high of 2,193.81, hit on Aug. 15, during midday trade and closed at a record high, as the energy sector gained 2.2 percent. The Nasdaq composite advanced 0.89 percent, also posting records on a closing and intraday basis.

The Russell 2000 and the S&P Mid Cap 400 indexes, which track small and mid cap stocks, respectively, also hit record highs.

"I think oil, and commodities in general, are leading the way for stocks," said Peter Cardillo, chief market economist at First Standard Financial. He also said that crude prices received a boost from a weaker dollar.

U.S. crude for December delivery rose 3.9 percent to settle at $47.49 per barrel. The U.S. dollar index, which surged 2.24 percent last week to its highest level since 2003, traded 0.26 percent lower, around 100.9.

That said, Randy Frederick, vice president of trading and derivatives at Charles Schwab, said he expects oil prices to hold in a range roughly between $40 and $50 per barrel. "We've got high supply and slow-growing demand," he said. "Any deal between OPEC would be shaky, as we've seen."

Traders work on the floor of the New York Stock Exchange.
Getty Images
Traders work on the floor of the New York Stock Exchange.

There were no major economic reports due Monday. However, Federal Reserve Vice Chairman Stanley Fischer delivered remarks about how fiscal policy can help boost productivity and, in turn, lower the burden of supporting the economy on the central bank.

"Certain fiscal policies, particularly those that increase productivity, can increase the potential of the economy and help confront some of our longer-term economic challenges," Fischer said.

The prospects of fiscal stimulus have risen sharply since Nov. 8, when Republican Donald Trump stunned the world by winning the U.S. presidential election. Investors and traders were quick to adjust positions, shifting large amounts of assets into sectors that would benefit from fiscal spending. They also piled into financials on hopes for deregulation within the sector.

Since Nov. 8, U.S. equities have seen a surge into record or near-record levels. But Stephen Wood, chief market strategist at Russell Investments, said a number of factors prior to the election primed the market to reach these levels. "We saw improvement in the inflation data, jobs and wages data and those factors sort of coalesced" with improving earnings, he said.

U.S. Treasurys, however, have taken a hit since the election, with the benchmark 10-year note yield breaking above 2 percent since then. On Monday, however, the 10-year note yield slipped to around 2.33 percent.

"When you get a knee-jerk reaction, it's not surprising to see a pullback," said Greg Woodard, portfolio strategist at Manning & Napier. "Having said that, there is a trend for higher fiscal stimulus around the world, and that is supportive of higher yields."

Later this week, which will be shortened by the Thanksgiving holiday on Thursday, the Fed is scheduled to release the minutes of its November meeting. That said, Schwab's Frederick said the minutes are likely to have little impact on the market since the odds of a rate hike next month are so high.

According to the CME Group's FedWatch tool, market expectations for a December rate increase were more than 95 percent.

Frederick also said he expects stocks to trade in a sideways pattern this week, given the holiday. "Traditionally, any holiday week is usually a low-volume week," he said.

In corporate news, Tyson Foods shares plunged 14.49 percent, after the firm reported weaker-than-expected quarterly results.

Overseas, European stocks mostly rose, with the pan-European Stoxx 600 index gaining 0.25 percent. In Asia, stocks closed mixed, with the Korean Kospi falling 0.43 percent and the Shanghai composite gaining 0.79 percent.

Symbol
Name
Price
 
Change
%Change
DJIA
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S&P 500
---
NASDAQ
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The Dow Jones industrial average closed 88.76 points higher, or 0.47 percent, at 18,956.69, with DuPont leading advancers and 3M the biggest decliner.

The S&P 500 gained 16.28 points, or 0.75 percent, to end at 2,198.18, with energy leading 10 sectors higher and real estate the only decliner.

The Nasdaq rose 47.35 points, or 0.89 percent, to close at 5,368.86.

About three stocks advanced for every decliner at the New York Stock Exchange, with an exchange volume of 845.46 million and a composite volume of 3.524 billion in at the close.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded lower, near 12.4.

Gold futures for December delivery rose $1.10 to settle at $1,209.80 per ounce.

Correction: This story has been updated to reflect Greg Woodard's title at Manning & Napier is portfolio strategist.

On tap this week:

Tuesday

10:00 a.m. Existing home sales

Wednesday

8:30 a.m. Durable goods

8:30 a.m. Jobless claims

9:00 a.m. FHFA home prices

9:45 a.m. Markit Manufacturing PMI

10:00 a.m. New home sales

10:00 a.m. Consumer sentiment

2:00 p.m. Fed minutes

Thursday

Thanksgiving holiday

US markets closed

Friday

8:30 a.m. Trade deficit

9:45 a.m. Markit Services PMI