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Wall Street extends rally in sharp New Year's rise
January 3, 2017 / 12:41 PM / 9 months ago

Wall Street extends rally in sharp New Year's rise

(Reuters) - Wall Street rose sharply on Tuesday as a post-election rally extended into the new year, helped by gains in Verizon Communications and technology companies Alphabet and Facebook.

U.S. stocks have surged over the past two months on expectations that President-elect Donald Trump will stimulate the economy with tax cuts and infrastructure spending and slash regulations in the financial industry.

“The market is picking up where it left off since the Trump presidency,” said Thomas Wilson, senior investment manager at Brinker Capital. “What you are seeing is the market moving up in anticipation of fiscal expansion.”

However, with the Dow Jones Industrial Average trading near the never-before-reached 20,000 mark, some investors warned that additional strong gains would be unlikely in the short term. They want to see evidence that Trump’s campaign-trail promises will be approved by Republican lawmakers concerned about widening the federal budget deficit.

“The president-elect can’t just wave a magic wand,” said Warren West, principal at Greentree Brokerage Services in Philadelphia. “He has to deal with Congress, and Congress hasn’t proved to be able to agree with itself.”

The Dow came within a hair’s breadth of the historic 20,000 milestone in December but it has since fallen back. The average rose to as much as 19,938.53 earlier in the session on Tuesday, helped by Walt Disney (DIS.N).

Ford Motor (F.N) jumped 3.79 percent. The carmaker said it would cancel a planned $1.6-billion factory in Mexico and invest $700 million at a Michigan factory, after Trump had harshly criticized the Mexico investment plan.

Oil prices hit an 18-month high before turning negative and falling more than 2 percent. The S&P energy index .SPNY rose 1.15 percent, with Exxon Mobil up 0.70 percent.

The U.S. dollar touched a 14-year high after data showed U.S. factory activity accelerated to a two-year high in December.

Traders work on the floor of the New York Stock Exchange (NYSE) shortly after the opening bell in New York, U.S., January 3, 2017. REUTERS/Lucas Jackson

The Dow Jones Industrial Average .DJI climbed 119.16 points, or 0.6 percent, to end at 19,881.76 points and the S&P 500 .SPX gained 0.85 percent to 2,257.83.

The Nasdaq Composite .IXIC added 0.85 percent to 5,429.08.

Verizon (VZ.N) gave the biggest boost to the S&P 500, rising 2.25 percent after Citigroup upgraded the stock to “buy.”

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Also boosting the S&P 500, Google parent-company Alphabet (GOOGL.O) rose 1.96 percent and Facebook (FB.O) added 1.57 percent.

The S&P health index .SPXHC rose 1.40 percent, with Merck & Co (MRK.N) up 2.17 percent and Gilead Sciences (GILD.O) rising 3.56 percent.

The S&P utilities index .SPLRCU dipped 0.30 percent, the only index down among 11 S&P sectors.

Marathon Petroleum (MPC.N) rose 5.12 percent after the company said it would explore a spinoff of its retail business, caving to pressure from activist investor Elliott Management.

Advancing issues outnumbered declining ones on the NYSE by a 3.24-to-1 ratio; on Nasdaq, a 1.79-to-1 ratio favored advancers.

The S&P 500 posted 17 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 121 new highs and 26 new lows.

Additional reporting by Yashaswini Swamynathan in Bengaluru; Editing by Nick Zieminski

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