The S&P 500 has already hit a new record—when including dividends.
The benchmark’s Total Return Index, which includes dividends in the
returns of the S&P 500, has moved higher at a faster pace in recent
sessions to again surpass its January highs.
That’s an encouraging sign for the broad S&P 500 stock index, which
has repeatedly flirted with record levels but remains about half a
percentage point below its all-time high set Jan. 26. The S&P 500,
which doesn't include dividends and is more closely followed by
investors, is up nearly 7% in 2018, just shy of the 8.1% advance for the
total return index.
In comparison, the technology-heavy Nasdaq Composite has hit repeated highs in the past two months, but the Dow Jones Industrial Average, which is more sensitive to trade tensions, is still 3.9% from its January high.
The total return index actually briefly breached its January record
once before on July 25, but a slump in tech stocks following
disappointing earnings reports from Facebook Inc. and Netflix Inc.
pulled it back down. It’s been steadily climbing again since the
beginning of the month.
A run-up in smaller-cap stocks in the index and continued strong
performance among high-growth-oriented companies in the
consumer-discretionary and tech sectors have played a big part in
pushing the total-return benchmark higher over the past several months,
said Bespoke Investment Group, which highlighted the outperformance of
the total return index in a research note this week.
Earnings have also helped, as companies in the S&P
500 wrap up their third consecutive quarter of year-over-year
double-digit profit growth. The S&P 500 total return index has
gained 7.5% in the past three months alone, accounting for much of its
gain for the year.
Those factors have helped to tamp down volatility, giving indexes a
clearer path to move meaningfully higher. Escalating trade tensions and
concerns over the Federal Reserve’s pace of interest-rate increase
continues to occasionally spook the stock market, but the impact hasn’t
been as detrimental as it was earlier this year when major indexes
plunged into correction territory amid fears of a pickup in inflation.
Wall Street’s most well-known fear gauge, the CBOE Volatility Index,
also known as the VIX, has been steadily falling to levels that haven’t
been seen since early January.
The S&P 500 and Nasdaq Composite both finished Wednesday roughly 0.5% from new records.
Oil prices fell to their lowest level in more than six weeks Wednesday
as U.S. stockpiles of oil and fuel hit a seven-month high.
On this day in 1995, the internet stock sector was born with a bang as
16-month-old Netscape Communications Corp. went public, issuing its IPO
on the Nasdaq at an initial price of $28 per share.
Jobless claims, due out at 8:30 a.m. ET, are expected to have inched up last week to 220,000.
The producer price index for final demand, also out at 8:30 a.m., is expected to have risen 0.3% from a month earlier in July.
Chicago Federal Reserve Bank President Charles Evans speaks at 9:30 a.m.
Wholesale trade inventories are expected to be flat versus the prior month in June. The data are due out at 10 a.m.
Government data on natural gas stockpiles, due out at
10:30 a.m., are expected to show a 47-billion cubic feet increase in the
week ended Aug. 3, according to the average forecast of nine analysts.
A high-speed rail line under construction in north China's Hebei
Province last month. China is fighting economic headwinds with an
infrastructure push. PHOTO: XINHUA/ZUMA PRESS
China is hunkering down for a long trade fight. Beijing said it would match the U.S. step for step
after the White House said it would impose new 25% tariffs on $16
billion worth of Chinese goods. China’s Ministry of Commerce released an
updated list of items to target with similar tariffs that would go into
effect the same day as the U.S. tariffs.
A Republican congressman was charged with insider trading. Prosecutors say Rep. Christopher Collins of New York tipped off his son about the confidential results of a drug trial so he could trade on it.
A discrepancy over Saudi oil data could rattle markets. Saudi Arabia, the world’s largest oil producer, is pushing back against analysts
who estimate it increased production in July, a move that could put it
in conflict with other members of the Organization of Petroleum
New York became the first U.S. city to put a cap on ride-hailing services. City council members froze new vehicle licenses for firms like Uber and Lyft for one year while the city studies the industry’s effects.
What We've Heard on the Street
"Of course, buyouts succeed or fail based on company fundamentals, not CEO bravado."
21st Century Fox—Up 0.2%:
The entertainment giant topped second-quarter earnings projections
Wednesday. The results come after Fox and Walt Disney shareholders
approved the acquisition of Fox in late July.
Tesla—Down 1.1%: The Securities and Exchange Commission is examining the veracity of CEO Elon Musk’s tweet Tuesday that he was considering taking the company private, as well as the use of Twitter for the disclosure.
The streaming service reported higher-than-expected earnings for the
second quarter on Tuesday, and upped its full-year outlook. The company
also announced a free web version of its Roku Channel service, which
will feature advertisements.
Yelp—Up 15%: The company on Wednesday reported better-than-expected second quarter earnings and raised its revenue guidance for the year.
The online travel company put its second-quarter earnings results on
hold Wednesday to “confirm certain business metrics,” it said, but
called its financial results “finalized and ready.” The company had been
scheduled to report at 4 p.m.