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Jul 11, 2016

Wall Street at Close Report, by CNBC on July 11, 2016: S&P Closes all-Time High, Nasdaq Ends at 2016 High

Fred Imbert

U.S. stocks closed higher on Monday as investors cheered an election in Japan and tried to extend a jobs-report rally.

The benchmark S&P 500 index hit a new all-time intraday high soon after the open, breaking a previous record set May 20, 2015. In afternoon trade, information technology led the S&P, with utilities and telecommunications lagging.
"What we've seen in the leadership is what you want to see, ... and what you see lagging is what you want to see," said Art Hogan, chief market strategist at Wunderlich Securities.
"I've been expecting a record close for a while," said Randy Frederick, managing director of trading and derivatives at Charles Schwab. "It's a good thing because it cements this 7-year-old market, which is the second longest in history."
The Dow Jones industrial traded up about 110 points, with Goldman Sachs, Boeing and 3M contributing the most gains. The Nasdaq composite was up nearly 1 percent, and broke above 5,000 for the first time since Dec. 31.
"I think what we're seeing is the successful election for [Shinzo] Abe ... is fueling the rally here," said Peter Cardillo, chief market economist at First Standard Financial. "Basically, it's a post-labor report rally helped by the elections in Japan."
Abe's coalition notched a landslide victory for the upper house in Japan's parliament. Abe had cast the election as a referendum on his "Abenomics" recipe of hyper-easy monetary policy, spending and reform. With signs the strategy is failing, the government plans to compile a post-election stimulus package that could exceed 10 trillion yen ($99 billion).
Major US indexes 5-year chart (indexed)
Source: FactSet
On Friday, the Bureau of Labor Statistics reported the U.S. economy added 287,000 jobs, easily beating expectations.
The jobs-report beat boosted U.S. stocks Friday, leaving the S&P 500 within striking distance of its all-time intraday high.
"Friday was probably light [on] volume, so it's nice to see more gains with more volume," said Mariann Montagne, senior investment analyst at Gradient Investments.
This week, Wall Street will brace itself for an array of speeches from Federal Reserve officials.
"We get bombarded with Fed speak this week just as the fed funds futures market is saying the Fed won't definitively raise rates again until December 2018. The last Fed dots had the expected fed funds rate at 2.4% by the end of 2018 vs 3% seen in March. The disconnect and disbelief continues," Peter Boockvar, chief market analyst at The Lindsey Group, said in a Monday note to clients.

Kansas City Fed President Esther George said the U.S. economy has proven to be "resilient," adding she expects to see "fairly steady pace of growth."
Trader on the floor of the New York Stock Exchange.
Brendan McDermid | Reuters
Trader on the floor of the New York Stock Exchange.
Cleveland Fed President Loretta Mester is scheduled to speak after the close. Other Fed officials scheduled to speak this week include St. Louis Fed President James Bullard and Minneapolis Fed President Neel Kashkari.
Investors and traders will also digest a slew of economic data sets this week, including the latest jobs opening and labor turnover survey (JOLTS) and wholesale trade data, both due Tuesday, and import-export prices, due Wednesday.
Also on deck this week is the start of earnings season, with Alcoa set to report quarterly results Monday after the close. Later this week, a slew of financial firms will post results, including JPMorgan Chase, and Citigroup.
"I'm not expecting anything good [from earnings]," said Phil Orlando, chief equity strategist at Federated Investors. "The economy is not growing fast enough" and margins "aren't getting fatter."
The Fed will also release its latest edition of the Beige Book, a summary of current economic conditions, on Wednesday.
Global bond yields have been under pressure recently, amid global growth concerns, with 10-year yields trading near all-time lows. On Monday, the benchmark yield held near 1.42 percent, while two-year note yields traded around 0.66 percent. Investors digested a $24 billion auction of three-year notes which saw weak demand.
"I think the flight to quality is based on a number of things," including uncertainty surrounding the U.K. leaving the EU and he U.S. elections, said Seth Crystall, senior credit analyst at Debtwire. "I think everybody gets the sense that the Fed is not going to move very soon."
The dollar index held about 0.3 percent higher, with the euro near $1.106 and the yen about 2 percent lower versus the greenback. The British pound briefly spiked after U.K. lawmaker Andrea Leadsom pulled out of the race to become the country's prime minister, clearing the way for Interior Minister Theresa May.
Current U.K. Prime Minister David Cameron said later on Monday he'd stand down from his post Wednesday.
European stocks rose broadly, with the Stoxx 600 index gaining more than 1.6 percent.
In Asia, stocks surged, as the Nikkei 225 rose about 4 percent.
DJIA Dow Industrials 18225.91 79.17 0.44%
S&P 500 S&P 500 Index 2137.12 7.22 0.34%
NASDAQ NASDAQ 4988.64 31.88 0.64%

The Dow Jones industrial average traded 109 points higher, or 0.60 percent, at 18,256, with Boeing leading advancers, with UnitedHealth Group and Verizon the only decliners.
The S&P 500 rose 10 points, or 0.5 percent, to 2,140, with information technology leading eight sectors higher and telecoms and utilities lagging.

The Nasdaq gained 38 points, or 0.78 percent, to trade at 4,995.

The CBOE Volatility index (VIX), widely considered the best gauge of fear in the market, traded lower, near 13.5.
About three stocks advanced for every decliner on the New York Stock Exchange, with an exchange volume of 483 million and a composite volume of 2.233 billion in afternoon trade.
U.S. oil settled 65 cents lower, or 1.43 percent, at $44.76 a barrel.
Gold futures for August delivery were settled at $1,356.60 per ounce, down $1.80.
On tap this week:

*Planner subject to change.


Earnings: Alcoa
Earnings: Fastenal, Adtran
6 a.m. NFIB survey
9:15 a.m. Fed Gov. Daniel Tarullo on shadow banking
9:35 a.m. St. Louis Fed President James Bullard
10 a.m. Wholesale trade; Jolts
1 p.m. 10-year note auction

6:30 p.m. Minneapolis Fed President Neel Kashkari
9:30 p.m. Cleveland Fed President Loretta Mester on financial stability
Earnings: CSX, Yum Brands
8:30 a.m. Import prices
9 a.m. Dallas Fed President Rob Kaplan on economy
1 p.m. 30-year bond auction

2 p.m. Federal budget; Beige book
6 p.m. Philadelphia Fed President Patrick Harker on economy
10:30 p.m. Cleveland Fed's Mester on economy
Earnings: JPMorgan Chase, BlackRock, Delta Air Lines, Taiwan Semiconductor, Progressive, First Republic Bank
8:30 a.m. Initial claims; PPI
10 a.m. St. Louis Fed President James Bullard
11:15 a.m. Atlanta Fed President Dennis Lockhart
1:15 p.m. Kansas City Fed's George on economy
7 p.m. Dallas Fed President Rob Kaplan on economy and policy
Earnings: Citigroup, Wells Fargo, US Bancorp, PNC, Shaw Communications
8:30 a.m. Retail sales, CPI, Empire State survey
9:15 a.m. Industrial production
10 a.m. Consumer sentiment; Business inventories
1:15 p.m. Minneapolis Fed's Kashkari and St. Louis Fed's Bullard in discussion
—Reuters contributed to this report.