Trading Nation

S&P 500 closes above 2,700 for the first time

Key Points
  • The S&P 500 advanced 0.6 percent to a record; the Dow and Nasdaq also closed at all-time highs.
  • Investors largely shrugged off a tweet from President Donald Trump about North Korea's Kim Jong-Un.
Dow, Nasdaq and S&P close at all-time highs

U.S. stocks rose to all-time highs Wednesday as a gain in chip stocks propelled the tech sector higher.

The S&P 500 advanced 0.6 percent to close at 2,713.06 with tech rising 1.1 percent. It was also the first time the index closed above 2,700 for the first time. Energy stocks also surged 1.5 percent after U.S. crude posted its best settle since December 2014.

The Nasdaq composite jumped 0.8 percent to 7,065.53, with Advanced Micro Devices surging more than 5 percent. The tech-heavy index also completed its best start to a year since 2006.

The Dow Jones industrial average finished 98.97 points higher at 24,922.68, as it closed in on the 25,000 mark.

"The 2017 trends are continuing in 2018," said Adam Sarhan, CEO of 50 Park Investments. "You're seeing a lot of money flowing back into the semiconductors" after some profit-taking at the end of last year. 

The VanEck Vectors Semiconductor exchange-traded fund (SMH) easily outperformed the broader market last year. It rose 36.5 percent while the S&P 500 gained 19.4 percent.

A trader on the floor of the New York Stock Exchange.
Brendan McDermid | Reuters

The Register reported there is a security flaw with Intel processors. The report said the issue will require a significant security update of Linux and Microsoft Windows operating systems to work around it. AMD shares jumped on the back of the report.

Nvidia's stock climbed 6.6 percent, following AMD's gains. Intel shares, meanwhile, declined more than 3.4 percent.

Last year's low volatility still persists in the early parts of 2018. The Cboe Volatility Index (VIX), widely considered the best gauge of fear in the market, dipped below nine for only the sixth time ever.

Investors largely shrugged off a tweet from President Donald Trump about North Korea's Kim Jong-Un. Trump tweeted on Tuesday that his "nuclear button" was "much bigger and more powerful" than the one controlled by the North Korean leader.

"The market has sort of priced in this kind of banter," said Jeff Zipper, managing director of investments at U.S. Bank Private Wealth Management. He also noted investors may be numb to these tweets "because they've become somewhat daily."

Stocks also got a boost from strong economic data. The ISM manufacturing index hit 59.7 percent in December, while construction spending rose 0.8 percent in November. The Atlanta Federal Reserve raised its fourth-quarter real GDP forecast to 3.2 percent from 2.8 percent, citing the strong ISM number. 

The Federal Reserve also released a summary of its December meeting. The minutes showed that changes to the federal tax code pushed the central bank to raise its economic forecast. President Trump signed a bill last month that revamped the U.S. tax code.

In corporate news, Scana shares popped 22.6 percent after Dominion Energy announced it was buying the South Carolina-based utility company for $7.9 billion.