U.S. equities closed higher in choppy trade on Wednesday, shrugging off a sharp decline in health care stocks following remarks made by President-elect Donald Trump.
"We have to get our drug industry coming back. Our drug industry has gotten disastrous. They're leaving left and right," Trump said at his first news conference since winning the U.S. election.
The Nasdaq composite fell after Trump made his remarks, as the iShares Nasdaq Biotechnology ETF (IBB) fell 3 percent. The tech-heavy index, however, ended the session 0.2 percent higher at a record closing level. The S&P 500 advanced 0.3 percent, shrugging off a 1 percent decline in health care. Energy stocks led the way in the S&P, rising 1.2 percent.
Randy Frederick, vice president of trading and derivatives at Charles Schwab, said the stock market has largely given Trump the benefit of the doubt. He said that would change after the inauguration. "After that point, his actions will become more important versus what he says," he said.
The Dow Jones industrial average closed about 99 points higher, with Goldman Sachs and IBM contributing the most gains. The blue-chips index briefly turned lower after Trump's remarks on the pharmaceutical industry.
Dow intraday chart
Investors came into the news conference looking for clues about his proposed policies. Stocks in the U.S. have rallied sharply since Trump's victory, amid hope that the incoming administration will cut corporate taxes, deregulate certain sectors and inject fiscal stimulus into the economy. Trump's news conference concluded without him providing details on these policies.
"We need some concrete numbers. We haven't sold off because there hasn't been a reason to do so. That said, you're dealing with some pretty nervous longs here," said JJ Kinahan, chief market strategist at TD Ameritrade.
"Our hope is that these three policies will be enacted and a more pragmatic approach will be taken to trade and immigration," said Jon Adams, senior investment strategist at BMO Global Asset Management. He also said he expects Trump to wait until the after the inauguration to provide more guidance on his policies.
That said, some of the president-elect's tweets have raised concerns among investors. Since Nov. 8, Trump has taken to Twitter to criticize companies that planned to send jobs overseas rather than create them in the United States. He has also threatened to levy a high border tax against those firms.
"What's interesting about Trump is he's sort of managed to work around the traditional news cycle," said Tom Siomades, head of Hartford Funds Investment Consulting Group. "The market is also grappling with that, too."
"Companies like Airbus and Boeing will not only have to think about their input cost, but they will also have to pay attention to (the) PR perspective," said Naeem Aslam, chief market analyst at Think Markets.
Separately, Trump's nominee for secretary of State Rex Tillerson, testified on Capitol Hill at his confirmation hearing. Tillerson, the former Exxon Mobil CEO, has raised concerns among most of the Democratic members of the Senate Foreign Relations Committee and Republican Marco Rubio, given his lack of public service experience and close ties to Russia.
"There's so much that could come out from those hearings," said Hartford Funds' Siomades. "This cast of characters is not well known, and the market could react to that."
Wall Street also braced itself for the start of earnings season, as banking giants JPMorgan Chase and Bank of America, among others, are slated to report quarterly results on Friday.
"I think we're going to get a good earnings season," said Bruce McCain, chief investment strategist at Key Private Bank. "The question is can the market sustain the euphoria with what could still be considered relatively modest earnings growth."
In the bond market, meanwhile, U.S. Treasurys traded higher after Trump's news conference, with the benchmark 10-year note yield falling to 2.365 percent and the yield holding near 1.18 percent.
The U.S. dollar fell 0.2 percent against a basket of currencies after trading higher, with the euro near $1.057 and the around 115.38. The pound briefly fell around 1 percent against the dollar, breaking below $1.21. Sterling last traded at $1.22.
Overseas, European equities traded higher, with the pan-European Stoxx 600 index advancing 0.23 percent. In Asia, Chinese stocks closed lower overnight, with the Shanghai composite dropping 0.79 percent, while the Japanese Nikkei 225 recorded a gain of 0.33 percent.
Major U.S. Indexes
The Dow Jones industrial average rose 98.75 points, or 0.5 percent, to close at 19,954.28, with Merck leading advancers and Pfizer lagging.
The rose 6.42 points, or 0.28 percent, to end at 2,275.32, with energy leading eight sectors higher and health care the top decliner.
The Nasdaq composite advanced 11.83 points, or 0.21 percent, to close at 5,563.65.
About two stocks advanced for every decliner at the New York Stock Exchange, with an exchange volume of 878.84 million and a composite volume of 3.563 billion at the close.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, rose 1.13 percent to trade at 11.25.
Correction: This story has been updated to reflect that the Nasdaq composite had not hit a new high as of midmorning ET.
On tap this week:
Wednesday
Earnings: KB Home
Thursday
Earnings: Taiwan Semiconductor, Infosys, Shaw Communications, Delta Airlines
8:30 a.m. Philadelphia Fed President Patrick Harker
8:45 a.m. Chicago Fed President Charles Evans and Atlanta Fed's Lockhart on a panel
8:30 a.m. Initial claims
8:30 a.m. Import prices
12:30 p.m. Atlanta Fed's Lockhart
1:00 p.m. $12 billion 30-year bond auction
1:15 p.m. St. Louis Fed President James Bullard
1:45 p.m. Dallas Fed President Rob Kaplan
2:00 p.m. Federal budget
7:00 p.m. Fed Chair Janet Yellen holds town hall with educators
Friday
Earnings: JPMorgan Chase, Bank of America, PNC Financial,Wells Fargo, First Republic Bank, BlackRock
8:30 a.m. Retail sales
8:30 a.m. PPI
9:30 a.m. Philadelphia Fed's Harker
10:00 a.m. Consumer sentiment
10:00 a.m. Business inventories