US Markets

Up! Up! Up! All three major US indexes close at record highs; materials lead

Pisani: Record highs all around
Pisani: Record highs all around

U.S. stocks rose Monday, with the three major indexes posting simultaneous record closes for the second time in less than a week, as investors digested rising oil prices.

"The fundamental picture has been mixed, so it's a little bit hard to look to that as the reason for what seems to be a solid rally," said Bruce McCain, chief investment strategist at Key Private Bank.

He also noted that Democratic nominee Hillary Clinton's lead in the polls over her GOP counterpart, Donald Trump, may be a contributing factor to the recent rally. "Not to make a statement on which candidate is better, but usually markets prefer for the incumbent party to retain the White House."

The three indexes also posted new intraday highs, as benchmark S&P 500 and the Nasdaq composite broke above previous intraday highs of 2,188.45 and 5,238.54, respectively, shortly after the open. The Dow Jones industrial average also posted a record high, rising past its previous high of 18,638.34. These previous records were all set last week, despite the indexes posting just slight weekly gains.

"It's a major vacation time between now and Labor day," said Ernie Cecilia, CIO at Bryn Mawr Trust. "The market right now is floating up on not a lot of news." "There's a lack of alternatives into other instruments," he said, noting that trading volume has been low recently.

The S&P closed about 0.3 percent higher, with materials leading. Twenty-nine S&P components hit new 52-week highs, including Sysco — which reported quarterly results before the bell, Ross Stores and Procter & Gamble.

"The market is being driven by the same theme," said Bruce Bittles, chief investment strategist at Baird, referring to low interest rates around the world and the "hunt for yield." "Until we get some optimism, the path of least resistance is higher. Nobody likes this market."

Spencer Platt | Getty Images

The Dow rose nearly 60 points, with Boeing and Goldman Sachs contributing the most gains. The Nasdaq outperformed, advancing nearly 0.6 percent.

"The market should continue to go higher on the no-alternative factor," said Peter Cardillo, chief market economist at First Standard Financial. "The market is feeding on itself."

"In order to get a big move down, ... you need to see some news the market perceives as bad," said Randy Frederick, managing director of trading and derivatives at Charles Schwab. "We don't have that right now."

Despite posting several milestones last week, stocks traded in a relatively narrow range. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near multi-year lows last week. On Monday, it rose 2.25 percent to 11.81.

Investors, meanwhile, were watching oil prices as U.S. crude settled 2.81 percent higher at $45.74 a barrel in choppy trade. On Monday, Russian Energy Minister Alexander Novak bolstered hopes that oil producing nations could take action to stabilize prices, telling a Saudi newspaper that his country was consulting with Saudi Arabia and other producers to achieve market stability.

"Good luck with that, if investors believe this. The move which we are seeing in the market is the real example how speculations can drive the price action. If you look at the demand equation, we had GDP data from the third biggest economy in the world and it is not something which is praising the demand for oil," said Naeem Aslam, chief market analyst at Think Markets.

On the data front, the Empire State Manufacturing survey index fell five points to -4.2.

"The lack of even a whiff of volatility, however, prevents me from shifting my outlook from neutral to something more far more negative. The intraday range for the blue chip index has consistently fallen to 0.25-0.50% of the underlying index level. When this statistic falls into this tight band, the blue chips have secured a positive daily return 67.7% of the time since October 2001 compared to 54.5% for all sessions over the same period," Jeremy Klein, chief market strategist at FBN Securities, said in a Monday note to clients.

Other data released Monday included the NAHB housing index, which showed homebuilder sentiment rose 2 points. The SPDR S&P Homebuilders ETF (XHB) rose about 1 percent, led higher by Toll Brothers, which was up about 3 percent.

Investors will also await for the Fed to release the minutes from its July meeting, although Schwab's Frederick said that he doesn't expect any big surprises from them.

On the earnings front, several firms, including Home Depot, Lowe's and Cisco Systems, are scheduled to report results this week.

"Through Friday's close, 459 companies, or 92%, of S&P 500 have reported 2Q 2016 results," said Nick Raich, CEO at The Earnings Scout, in a Monday note. "While 71% of those companies are exceeding their 2Q 2016 EPS estimates, 60% have had their 3Q 2016 EPS estimate go lower, on average by -1.79%, after releasing results."

Last week, retail giant Macy's posted better-than-expected results.

U.S. Treasurys fell on Monday, with the two-year note yield holding near 0.72 percent and the benchmark 10-year yields trading at 1.55 percent. The dollar traded lower against a basket of currencies, with the euro near $1.119 and the around 101.2. The pound also hit a one-month low against the greenback.

Overseas, European stocks traded mostly flat. Asian equities traded mixed, as Japan's Nikkei 225 fell after its GDP data disappointed, while China's Shanghai composite rose more than 2 percent on stimulus hopes.

Major U.S. Indexes

The Dow Jones industrial average rose 59.58 points, or 0.32 percent, to close at 18,636.05, with DuPont leading advancers and WUni tedHealth Group the biggest decliner.

The closed 6.10 points higher, or 0.28 percent, at 2,190.15, with materials leading seven sectors higher and utilities the biggest laggard.

The Nasdaq rose 0.56 percent, or 29.12 points, to end at 5,262.02.

About two stocks advanced for every decliner at the New York Stock Exchange, with an exchange volume of 728.19 million and a composite volume of 3.018 billion at the close.

Gold futures for December delivery settled $4.30 to $1,347.50 per ounce.

—Reuters contributed to this report.

On tap this week:

*Planner subject to change.


4 p.m. TIC data


Earnings: Home Depot, Dick's Sporting Goods, TJX, Urban Outfitters, Momo, Popeyes Louisiana Kitchen, Advance Auto Parts, Cree

8:30 a.m. CPI; housing starts

9:15 a.m. Industrial production

12:30 p.m. Atlanta Fed President Dennis Lockhart


Earnings: Target, Staples, Lowes, Cisco, L Brands, NetApp, Eaton Vance, American Eagle Outfitters, Performance Food, CACI

2 p.m. FOMC minutes


Earnings: Wal-Mart, Applied Materials, Gap, Ross Stores, Hormel Foods, Mentor Graphics, Nestle

8:30 a.m. Initial claims; Philadelphia Fed survey

10 a.m. New York Fed President William Dudley

4 p.m. San Francisco Fed President John Williams


Earnings: Deere, Estee Lauder, Foot Locker, Madison Square Garden, The Buckle