S&P 500, Dow Reach New Record Highs
Wall Street extended a rally into day three on Tuesday, pushing the S&P 500 and Dow Jones Industrial Average to clinch new record closing highs.
The S&P 500 was up 0.70%, clinching a record close of 2,152.14. The benchmark index had closed at a record a day earlier for the first time in 14 months.
The Dow climbed 0.66% to 18,347.67, breaking a previous record close seen on May last year. The Nasdaq added 0.69% to erase all 2016 losses. It closed at 5,022.82.
Stocks have been in rally mode since last Friday when a better-than-expected U.S. jobs report for June brought relief over the state of the U.S. economy. A dismal May reading had triggered fears over growth.
A crude rally supported Wall Street's gains. Oil jumped after a report from the Organization of the Petroleum Exporting Countries forecast an increase in demand and a decline in production in 2017. The group, which accounts for around a third of the world's supply, expects demand for its crude to increase to 33 million barrels a day next year.
West Texas Intermediate crude oil closed 4.6% higher at $46.77 a barrel on Tuesday, a nearly one-week high.
"Petroleum prices have turned higher in Tuesday trade supported by further gains in the equity markets, a softer U.S. dollar and an OPEC forecast for the market to rebalance in 2017," said Timothy Evans, energy futures analyst at Citi. "While we will credit the market with achieving a balance for 2017 as a significant improvement over the past two years of surplus, we note this scenario also suggests it will be 2018 before we see global inventories trending lower."
The energy sector was the best performer on Wall Street Tuesday. Major oilers including Exxon Mobil (XOM) - Get Report , Chevron (CVX) - Get Report , Halliburton (HAL) - Get Report and ConocoPhillips (COP) - Get Report were all higher, while the Energy Select Sector SPDR ETF (XLE) - Get Report added nearly 3%.
Alcoa (AA) - Get Report reported earnings Monday afternoon, unofficially kicking off the earnings season. The aluminum producer beat earnings and revenue estimates in its second quarter even as sales dropped. The company earned an adjusted 15 cents a share, above expectations of 9 cents. Revenue slid 10% to $5.3 billion but came in higher than forecasts of $5.2 billion. Alcoa shares were up nearly 6% on Tuesday
The second-quarter earnings season is likely to be another quarter in decline, pulling S&P 500 companies into their longest earnings recession since the start of the financial crisis. U.S.-listed companies have seen profits decline for five straight quarters, according to FactSet. But this might be the beginning of the end to this losing streak.
"The best thing to say about this streak, the longest since 2008, is that the drop will likely confirm that the 5% year-over-year decline in the first quarter of 2016 marked a trough," said Burt White, chief investment officer for LPL Financial. "Signs are pointing to better times ahead."
Job openings in May fell to their lowest level of 2016, according to the Labor Department. Openings fell by 345,000 to a seasonally adjusted 5.5 million, down from a record high set in April. The Job Openings and Labor Turnover Survey showed the hiring rate steady, at 3.5%.