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Trump trade lifts stocks to more records as S&P reaches $20 trillion in market cap

U.S. stocks climbed to new record highs Monday as investors remained bullish on President Donald Trump's economic agenda.

"The market is going on the optimism of the Trump tax plan that will be announced soon," said Robert Pavlik, chief market strategist at Boston Private Wealth. "This is very good news for the market."

The Dow Jones industrial average rose about 140 points, with Goldman Sachs contributing the most gains, to post its 22nd record close since Nov. 8. The S&P 500 gained 0.5 percent, with financials rising more than 1 percent to lead advancers, to notch its 14th record close since the U.S. election.

S&P also reached $20 trillion in market cap for the first time ever. It needed to break above 2,324.22 to reach the milestone, according to data from Howard Silverblatt, senior Index analyst at S&P Dow Jones Indices.

"The SPX extended its uptrend to a new all-time high last week, resolving another consolidation phase to the upside," said Katie Stockton, chief technical strategist at BTIG, in a note. She added that "short-term overbought conditions are not likely to be a near-term hindrance, particularly given the widespread breakouts that have occurred."

The Nasdaq composite advanced 0.5 percent as Apple shares closed at an all-time high. The index also posted its 23rd record close since Trump was elected.

Traders work on the floor of the New York Stock Exchange
Spencer Platt | Getty Images
Traders work on the floor of the New York Stock Exchange

"There is a bullish bias remaining in the market after Trump said there will be a phenomenal tax plan coming," said Nick Raich, CEO of The Earnings Scout. "I think investors don't want to be on the wrong side of that if the plan is as phenomenal as he says it is."

Last week, Trump said his administration will be announcing a "phenomenal" tax plan over the next two or three weeks. Since then, equities have continued to grind higher into record territory.

"There is some momentum buying here on the resurgence of the Trump trade," said Peter Cardillo, chief market economist at First Standard Financial, noting that stocks in Europe and Asia also traded higher on Monday.

Stocks had already rallied sharply since Trump's election on hopes of not just corporate tax cuts, but also deregulation and government spending. But before last week's break to new highs, U.S. equities had traded mostly sideways for more than a month as investors searched for clues about when these proposals would become reality.

There are no major economic data due Monday, but investors will be looking ahead to Federal Reserve Janet Yellen's testimony on Capitol Hill, slated for Tuesday.

"The Fed's statement on February 1 didn't provide any additional clues on monetary policy direction, and as of last week, markets were only pricing in 13.3% chance for a rate hike in March and 23.7% in May," said Hussein Sayed, chief market strategist at FXTM, in a note. "... it's going to be interesting on which side will Yellen move the needle."

On the earnings front, Restaurant Brands International, Teva Pharma and First Data were among the companies posting quarterly results before the bell. Arch Capital Group, Noble Energy, Vornado Realty and OneMain Holdings are all due to report after the market close.

U.S. Treasurys traded lower Monday, with the benchmark 10-year note yield rising to 2.431 percent and the short-term two-year note yield advancing to 1.19 percent. The dollar rose 0.17 against a basket of currencies, with the euro near $1.0604 and the yen around 113.61.

Overseas, European equities traded mostly higher, with the pan-European Stoxx 600 index advancing 0.75 percent. In Asia, stocks closed higher, with the Nikkei 225 rising 0.41 percent and the Shanghai composite gaining 0.63 percent.

Symbol
Name
Price
 
Change
%Change
DJIA
---
S&P 500
---
NASDAQ
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The Dow Jones industrial average gained 142.79 points, or 0.70 percent, to close at 20,412.16, with Caterpillar leading advancers and Verizon lagging.

The S&P 500 rose 12.15 points, or 0.52 percent, to end at 2,328.25, with financials leading 10 sectors higher and telecommunications lagging.

The Nasdaq composite advanced 29.83 points, or 0.52 percent, to close at 5,763.96.

About nine stocks advanced for every five decliners at the New York Stock Exchange, with an exchange volume of 798.70 million and a composite volume of 3.327 billion at the close.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 11.1.

High-frequency trading accounted for 52 percent of February's daily trading volume of about 6.8 billion shares, according to TABB Group. During the peak levels of high-frequency trading in 2009, about 61 percent of 9.8 billion of average daily shares traded were executed by high-frequency traders.

On tap this week:

Monday

Earnings: Vornado Realty, First Data, HCP, Flowers Foods

Tuesday

Earnings: AIG, Credit Suisse, Dr. Pepper Snapple, T-Mobile US, Discovery Communications, TransUnion, Devon Energy, Express Scripts, Lending Club, Generac, Molson Coors Brewing

6:00 a.m. NFIB survey

8:30 a.m. PPI

8:50 a.m. Richmond Fed President Jeffrey Lacker on economy

10:00 a.m. Fed Chair Janet Yellen before Senate Banking Committee

1:00 p.m. Dallas Fed President Rob Kaplan

1:15 p.m. Atlanta Fed President Dennis Lockhart on crisis, recession, recovery

Wednesday

Earnings: PepsiCo, Applied Materials, Cisco, Kraft Heinz, Groupon, Marriott, Marathon Oil, CBS, Och-Ziff, Chemours, NetApp, Avis Budget, Kinross Gold

8:30 a.m. Retail sales

8:30 a.m. CPI

8:30 a.m. Empire State manufacturing

9:15 a.m. Industrial production

10:00 a.m. Fed Chair Yellen testifies before House Financial Services Committee on economy

10:00 a.m. Business inventories

10:00 a.m. NAHB survey

12:45 p.m. Philadelphia Fed President Patrick Harker on economy

4:00 p.m. TIC data

Thursday

Earnings: TransCanada, Wendy's, Time Inc, Avon, Alexion, GNC, Dean Foods, Cabela's, MGM Growth, PG&E, Con Ed, WebMD, Encana

8:30 a.m. Jobless claims

8:30 a.m. Housing starts

8:30 a.m. Building permits

8:30 a.m. Philadelphia Fed survey

Friday

Earnings: Campbell Soup, Fluor, Bloomin' Brands, Deere, JM Smucker, Moody's, VF Corp, Allianz