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Dow hits record during Comey testimony, but ends day off the highs

  • The Dow Jones industrial average hit an intraday record before closing about 10 points higher.
  • Jaimes Comey's testimony failed to "spook" investors as his remarks did not include a "smoking gun."

U.S. equities closed mostly higher on Thursday as Wall Street digested former FBI Director James Comey's testimony.

The Dow Jones industrial average finished just 8 points higher for the day with Goldman Sachs contributing the most to gains. The average hit an intraday record, soaring more than 80 points midday, following the Comey comments, but gave up most of that increase by the close.

"There were no major bombshells from Comey's testimony," said Lindsey Bell, investment strategist at CFRA, adding the market experienced a small "relief rally" that pushed the 30-stock index to a new high.

The S&P 500 ended marginally higher after nearly hitting a record high of 2,440.23, with utilities leading decliners while a rise in bank stocks capped losses. Bank stocks, some of the early beneficiaries from Trump's election, rose on Thursday, with the SPDR S&P Bank ETF (KBE) jumping more than 2.5 percent. Investors in the space also kept an eye on the House as they prepared to vote on the Financial Choice Act.

"We tested 2,440 on the S&P 500 and we didn't break it," said Jeremy Klein, chief market strategist at FBN Securities. "I think some large-cap traders are just taking some profits."

The Nasdaq composite advanced 0.4 percent and managed intraday and closing record highs.

In his testimony, Comey said he kept records of his conversations with Trump — something he did not do when Barack Obama was president — because he thought Trump might "lie."

"Investors are not spooked by this at all," said Eric Aanes, president and founder of Titus Wealth Management. "The only thing that could be an issue is [potential] delays into tax cuts."

Investors listened closely as they assess how damaging Comey's remarks will be for President Donald Trump and whether he can implement his pro-growth agenda. "That's really what the market cares about," said Robert Pavlik, chief market strategist at Boston Private Wealth.

Expectations for tax reform, deregulation and infrastructure spending were a key catalyst for stocks after Trump's election. But uncertainty about the implementation of those measures has grown with time as the Trump administration is forced to put out one fire after another.

Traders work on the floor of the New York Stock Exchange.
Getty Images
Traders work on the floor of the New York Stock Exchange.

The major indexes spiked around midday in New York as Comey's testimony concluded; they traded mostly flat as Comey spoke.

"There's nothing that we didn't already know," said Scott Clemons, chief investment strategist at Brown Brothers Harriman. "The real sigh of relief was seen in the Vix, which sold off a bit."

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, fell by more than 5 percent before trading 1.5 percent lower at 10.2.

The Senate Intelligence Committee released Comey's written testimony on Wednesday, in which Comey said he believed Trump wanted him to "drop" an investigation into former National Security Advisor Michael Flynn's ties to Russia.

"The release of Comey's opening statement for his Thursday testimony late in the day by the Senate intelligence committee was a major event and was interpreted as risk-positive by the market since (according to our read) it did not appear to offer a smoking gun against the administration," Ian Lyngen, head of U.S. rate strategy at BMO, said in a note.

Bond yields rose slightly, with the benchmark 10-year note yield held near 2.208 percent, while the two-year note yield traded near 1.33 percent.

Wall Street also digested news coming from Europe, as the European Central Bank kept interest rates unchanged. The ECB dropped all references to a future rate cut from its statement but added that it would be ready to extend its quantitative easing (QE) program if needed. The euro fell 0.4 percent to $1.1216 against the dollar.

Also in Europe, voters in the United Kingdom made their way to the polls for a general election. Prime Minister Theresa May called for the election in April. Seven weeks ago, May's Conservative party had a seemingly unassailable lead over the left-wing Labour party, but that lead has narrowed significantly since then.

"I'd put this, ironically, in the same category as the Comey testimony," said Harriman's Clemons. "They are events that take up a lot of attention, but ultimately shouldn't hurt U.S. markets."

Symbol
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DJIA
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S&P 500
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NASDAQ
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The Dow Jones industrial average rose 8.84 points, or 0.04 percent, to close at 21,182.53, with Caterpillar leading advancers and Walt Disney lagging.

The S&P 500 gained 0.65 points, or 0.03 percent, to end at 2,433.79, with financials leading five sectors higher and utilities the biggest decliner.

The Nasdaq advanced 24.38 points, or 0.39 percent, to close at 6,321.76.

About four stocks advanced for every three decliners at the New York Stock Exchange, with an exchnage volume of 910.41 million and a composite volume of 3.711 billion at the close.

—CNBC's Jacob Pramuk and Karen Gilchrist contributed to this report.