U.S. equities rose on Tuesday, as a post-election rally continued, while investors digested key economic data and braced for two key central bank meetings.
The Dow Jones industrial average rose about 35 points to post a record closing high, with Goldman Sachs adding the most gains. The blue-chips index also posted its 11th record close since the election. Earlier, Boeing shares were under pressure after President-elect Donald Trump threatened to cancel an order for a new 747 Air Force One.
"I think we can still go higher towards the end of the year," said Aaron Clark, portfolio manager at GW&K Investment Management. "The post-election narrative is still in place."
The S&P 500 gained 0.3 percent, with telecommunications rallying 1.5 percent to lead advancers. Energy shares, meanwhile, faced pressure from falling oil prices. U.S. crude futures for January delivery dropped 1.7 percent to settle at $50.93 per barrel.
The Nasdaq composite advanced approximately half of a percent, while the small caps Russell 2000 and the S&P Mid Cap 400 closed at record highs.
"Short-term momentum remains positive for the SPX despite last week's pullback," said Katie Stockton, chief technical strategist, in an email. "Sentiment has gotten overly bullish by some measures, but we think it can stay that way through the holidays given positive seasonal influences."
Stocks have rallied sharply since Donald Trump stunned the world by defeating former Secretary of State Hillary Clinton in the U.S. presidential election, with optimism for greater infrastructure spending and deregulation of certain sectors propelling the sharp increase. The Russell 2000 has handily outperformed the three major indexes since Nov. 8.
US stocks since Nov. 8Source: FactSet
In economic news, third-quarter U.S. productivity rose at an annualized rate of 3.1 percent, the Labor Department said, while the U.S. trade deficit widened to $42.6 billion. October factory orders, rose 2.7 percent, slightly above a 2.6 percent estimate from Reuters.
The Fed is largely expected to raise interest rates by 25 basis points, as investors look for clues about the central bank's pace of normalization. According to the CME Group's FedWatch tool, market expectations for a rate hike next week are more than 90 percent, but just 5.2 percent for a February increase. Meanwhile, the ECB is widely expected to extend its quantitative easing beyond March 2017.
"The transparency and certainty of monetary policy will eliminate any lingering skittishness and source a stiff tailwind at the back of the broader indices. Short term participants therefore have a green light to hitch a ride on Santa's sleigh as shares climb ahead of the ball falling in Times Square," Jeremy Klein, chief market strategist at FBN Securities, said in a note.
"Monetary policy has taken a back seat to fiscal policy, which I think is a good thing," said GW&K's Clark. He added, however, investors could be thrown for a loop if the Fed indicates a faster pace of normalization.