U.S. stock markets climbed to new record highs on Tuesday, capping off three days of gains and sending the tech-heavy Nasdaq index into positive territory for the year. þþThe daily gain was modest, with major indices rising by less than 1 percent, but the move was enough to push the markets above their previous records. þþThe Dow Jones industrial average rose 121 points, or 0.7 percent, to close at 18348. The Standard & Poor’s 500-stock index increased by 0.7 percent to 2,152, topping the all-time high reached Monday. The Nasdaq, which has been slowest to recover from heavy losses earlier in the year, also gained 0.7 percent to close at 5022.þþThe new stock market records came a day after Theresa May emerged as Britain’s new prime minister, signaling that investors are optimistic that the Brexit will have limited effects on the global economy. May, who had opposed the vote to leave, will take the top job on Wednesday. þþSome economists expect the Bank of England this week to announce its first interest rate cut in seven years, according to a Bloomberg News survey.þþþThe stock gains show that investors are willing to take on more risk. The rally coincided with a sell-off in Treasury bonds, which investors had piled into in a flight to safety after Brexit, sending bond yields to record lows. On Tuesday, the yield on the 10-year Treasury increased slightly to 1.53 percent, up from the 1.37 percent yield reached on Friday. þþStocks advanced broadly. Financial stocks, which were pummeled in the wake of Britain’s vote to leave the European Union, rebounded by 1.2 percent. Big technology stocks also rose. The rally followed stronger-than-expected earnings report from Alcoa, which kicked off the earnings season Monday afternoon. Its stock rose more than 5 percent on the news. þþEnergy stocks, bolstered by higher crude oil prices, surged 2.3 percent. A forecast of higher oil demand by the Organization of the Petroleum Exporting Countries and a drop in U.S. crude oil inventories drove the increases. The price of the West Texas Intermediate grade of crude oil closed at $46.61 a barrel in New York, up 4.13 percent from the day before and up about 70 percent from this year’s low point.þþThe biggest stock market gains were registered by big U.S. shale drillers on hopes that rising oil prices would revive drilling prospects. Continental Resources, the biggest shale oil driller in North Dakota’s Bakken region, soared 7.8 percent to close at $45.75 a share. Noble Energy jumped 3.23 percent, and Whiting Petroleum leapt 12.5 percent. The major international oil giants also rose, but by lesser amounts. þþOPEC fed oil traders’ hopes that the surplus of oil production would dissipate. OPEC said its members would have to produce more next year to meet rising consumption and falling non-OPEC oil output. And the federal Energy Information Administration reiterated in its short-term energy outlook that U.S. crude oil production, which averaged 9.4 million barrels per day in 2015, would continue to slide to an average of 8.6 million barrels a day in 2016 and 8.2 million barrels a day in 2017. þþ“Market conditions will help remove overall excess oil stocks in 2017,” OPEC’s research department said in its monthly market report. “The contraction seen this year in non-OPEC supply is expected to continue in 2017, but at a slower pace.”
Source: Washington Post
