U.S. equities kicked off the week on the right foot, closing at record highs Tuesday following a key naming by the Trump administration and corporate earnings.
The Dow Jones industrial average rose more than 100 points, with Boeing and UnitedHealth contributing the most gains. The S&P 500 gained 0.6 percent, with real estate leading all sectors higher.
"The fundamental backdrop continues to support us while we wait for tax reform and deregulation," said Art Hogan, chief market strategist at Wunderlich Securities. "Investors have been patient, but at some point that patience will run out; just not today."
The Nasdaq composite advanced 0.47 percent. The Russell 2000, which is made up of small-cap stocks, also reached new records.
The U.S. stock market was closed Monday in observance of the Presidents' Day holiday.
"I think this is mainly about the earnings," said Sam Stovall, chief investment strategist at CFRA Research. "While the appointment of General McMaster is a positive, it still boils down to whether the market will get the kind of policy it expects." He also said the market could be "chasing itself higher in a fear-of-missing-out mindset."
Dow, S&P, Nasdaq and Russell since US election
Source: FactSet
The White House announced Monday that Lieutenant General H. R. McMaster will become the new national security advisor. McMaster replaces Michael Flynn, who resigned last week.
"This is very, very good for the market," said Quincy Krosby, market strategist at Prudential Financial, adding McMaster's naming helps assuage some of the concerns that President Donald Trump's administration is in disarray.
Investors also digested several corporate quarterly results, including retail giants and . Macy's posted mixed results, beating earnings per share estimates but falling short on sales, while Home Depot exceeded Wall Street expectations.
"The positive guidance out of Home Depot points to a buoyant consumer," said Krosby.
Stocks — which also managed record levels last week — have been on a rip-roaring rally since the U.S. election, as investors have piled on to bets that the new administration will be able to enact significant corporate tax cuts and deregulation. The three large-cap indexes and the Russell have gained more than 10 percent since the election.
Following equities higher has been the U.S. dollar, which traded about half a percent higher against a basket of currencies, as market expectations for tighter monetary policy have increased.
"Although the current March hike madness theme could uplift the Dollar higher in the short term, the visible lack of commitment to a timeline in raising US rates may swiftly cap upside gains," said Lukman Otunuga, research analyst at FXTM, in a note.
The dollar index, which tracks the U.S. currency's performance against six others, is down about 1 percent this year but has gained nearly 4 percent since Nov. 8.
"I think it's more of a weaker-euro story than a strong dollar story right now," said Matt Weller, senior market analyst at Faraday Research. "We're currently testing a key level around 101.50. If we can clear that level, it could signal more weakness for the euro or more optimism surrounding the U.S."
In economic news, the flash read on the IHS Markit U.S. purchasing managers' index hit 54.3 for February, falling slightly from January's 14-month peak. The "latest survey data indicated that business optimism moderated among U.S. private sector firms in February, driven by weaker confidence across the service economy," IHS said.
Overseas, European stocks rose broadly after strong economic data, with the pan-European Stoxx 600 index rising 0.64 percent. However, worries about a possible victory by Marine Le Pen in the French election remained.
The spread between 10-year French bonds and their German counterpart ticked above 81 basis points Monday, hitting its highest level in about five years. "This shows that investors have no interest in holding French bonds and they are running towards German bonds," said Naeem Aslam, chief market analyst at Think Markets.
Major U.S. Indexes
The Dow Jones industrial average rose 118.95 points, or 0.58 percent, to close at 20,743, with Wal-Mart leading advancers and Caterpillar the biggest decliner.
The gained 14.22 points, or 0.6 percent, to end at 2,365.38, with real estate leading all 11 sectors higher.
The Nasdaq composite advanced 23.37 points, or 0.47 percent, to close at 5,865.95.
About three stocks advanced for every decliner at the New York Stock Exchange, with an exchange volume of 877.13 million and a composite volume of 3.535 billion at the close.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 11.5.
U.S. crude oil for March delivery rose 1.2 percent to $54.06 per barrel. Gold futures for April delivery fell 20 cents to $1,238.90 per ounce.
On tap this week:
Tuesday
Earnings: Papa John's, Extra Space Storage, Newmont Mining, FirstEnergy, Morningstar, Newfield Exploration
Wednesday
Earnings: Tesla Motors, L Brands, HP, Cheesecake Factory, Boston Beer, Fitbit, Iamgold, Bayer, TJX Cos, Host Hotels, Norwegian Cruise Lines, Toll Brothers, Garmin, Chico's FAS, Southern Co, Six Flags
10:00 a.m. Existing home sales
1:00 p.m. 5-year note auction
2:00 p.m. FOMC minutes
Thursday
Earnings: Barclays, Kohl's, Gap, Nordstrom, Chesapeake Energy, Hormel Foods, Seadrill, Cinemark, AMC Networks, Kate Spade, Baidu, Splunk Imax, Intuit, Axa, NovoCure, Pinnacle Foods, Wayfair, Canadian Imperial Bank
8:30 a.m. Initial claims
8:30 a.m. Atlanta Fed President Dennis Lockhart
9:00 a.m. FHFA home prices
9:45 a.m. Service PMI
1:00 p.m. 7-year note auction
Friday
Earnings: JC Penney, Royal Bank of Canada, Foot Locker, Public Service, Rowan Cos
10:00 a.m. New home sales
10:00 a.m. Consumer sentiment