The Dow Jones Industrial Average traded above its record close on Thursday as a banking rally and another surge in crude prices benefited the blue-chip index.
The Dow climbed 0.4% to 19,200, trading above the record set last week. The S&P 500 was down 0.1%, and the Nasdaq fell 1%.
Banking stocks continued to rally as President-elect Donald Trump filled out his Cabinet with picks presumed to be friendly to Wall Street. Steve Mnuchin, nominated Treasury secretary on Wednesday, is a veteran banker and former executive of Goldman Sachs. Mnuchin suggested he would roll back portions of the Dodd-Frank financial rules, the 2010 legislation introduced as a measure to ensure banks were strong enough to weather future financial crises.
Other picks include industrialist billionaire Wilbur Ross for commerce secretary and millionaire Betsy DeVos for education secretary. The Washington Post suggested it could be the richest administration in modern American history, far surpassing George W. Bush's first Cabinet which had a total net worth of roughly $250 million.
Dow components Goldman Sachs (GS) and JPMorgan (JPM) rose, while Morgan Stanley (MS) , Bank of America (BAC) and Citigroup (C) were all sharply higher. The Financial Select Sector SPDR ETF (XLF) rose 1.4%.
A decline in tech stocks pulled the Nasdaq lower. Facebook (FB) shares declined 3.4% in trading Thursday.
Bond yields increased on Thursday as a bond rout that characterized a difficult November extended into December. Bond prices have been pushed lower on higher inflation expectations driven by Trump's proposed infrastructure spending plans and improving economic data. Both have lifted the chances of a faster rate of interest rate increases.
Global bonds lost $1.7 trillion in value last month, their worst performance since 1990, according to Bloomberg. The 10-year U.S. Treasury yield was trading at 2.454% on Thursday morning, its highest level since July last year.
Crude oil rose Thursday morning on continued goodwill over a production freeze agreement among major oil-producing nations. On Wednesday, the Organization of Petroleum Exporting Countries reached an agreement to trim production by 1.2 million barrels a day. OPEC currently produces 33.6 million barrels a day, a record high. The deal hinges on non-OPEC producers committing to reduce output by 600,000 barrels a day, half of which Russia has reportedly already agreed to deliver. The cut is OPEC's first since 2008.
West Texas Intermediate crude was up 3.4% to $51.13 a barrel.
The U.S. jobs report for November, one of the most closely watched pieces of data of the month, will be under an even more intense spotlight on Friday as investors look for confirmation the Federal Reserve will pull the trigger on interest rates at their December meeting. Economists anticipate 180,000 jobs to have been added to the U.S. economy in November and for the unemployment rate to hold at 4.9%.
"Another healthy report reflecting job growth near its recent trend (175k-195k) will give the Fed added comfort to lift rates in December, though the bar for a rate move is low in our view and any print at or above the break-even pace (roughly 100k) is likely sufficient," TD Securities analysts wrote in a note.
The U.S. economy added 161,000 jobs in October, 10,000 short of estimates but generally showcasing robust workforce trends. Average hourly earnings also rose to their highest since July, while year-over-year earnings increased to their best since 2009.
Initial jobless claims rose in the past week to its highest level in five months, though remained at multi-year lows. The number of new claims for unemployment benefits rose by 17,000 to 268,000 in the week ended Nov. 26, according to the Labor Department. Analysts had anticipated a reading of 255,000. The less-volatile, four-week average climbed 500 to 251,500.
"Despite this week's increase, the ongoing low level of claims should give the FOMC comfort that labor markets continue to tighten and that they continue to make progress toward the committee's labor market objectives," said Barclays' Rob Martin. "On the whole, we view incoming claims data as very supportive of further improvement in labor market conditions this year."
A rate hike in December has a high probability among Wall Street pundits as the labor market continues to exhibit strength and inflation trends towards the Fed's 2% target rate. The chances of a December rate hike sit at more than 95%, according to CME Group fed funds futures.
Manufacturing activity rose to a reading of 53.2 in November from 51.9 in October, the highest level in five months, according to the ISM Manufacturing Index. Analysts anticipated a reading of 52.2. A separate reading on manufacturing from Markit Economics' PMI Manufacturing Index showed activity rose to 54.1 in November from 53.9 in October.
Construction spending in the U.S. increased 0.5% in October, up from a flat reading in September. The increase was broadly in line with estimates.
Ford (F) climbed more than 2% following a robust sales performance in November. The automaker recorded a 5% increase in U.S. sales last month, driven by a 10% rise in retail sales. Sales of its F-Series increased 11%.
General Motors (GM) also benefited from a strong November, reporting a 10.2% increase in total sales. Retail sales increased nearly 9%, boosted by an 8% jump at Chevrolet and 16% boost at Buick. Two additional selling days this November compared to the last made for favorable comparisons.
Fiat Chrysler (FCAU) suffered from a sharper drop in sales in November than analysts expected. The carmaker reported a 14% drop in overall unit sales, dragged on by a 34% plummet in car sales and 13% drop in utility sales.
Aradigm (ARDM) slumped after disappointing top-line results from late-stage clinical trials for its lung-infection treatment Pulmaquin. The drugmaker saw statistically significant discrepancies between two trials for the once-daily inhaler treating non-cystic fibrosis bronchiectasis.
Express (EXPR) tumbled more than 10% after issuing guidance for its current quarter weaker than analysts anticipated. The apparel retailer anticipates fourth-quarter earnings no higher than 30 cents a share, sharply lower than analysts' estimates of 54 cents. Same-store sales are targeted to fall in the "negative low double digits" percentage range, sharper than a forecast 7.6% decline.
Guess? (GES) slumped 13% after reducing its full-year profit target following a disappointing recent quarter. The retailer reported quarterly revenue rose 2.9% to $536 million, below its previous guidance of 5% to 8% growth. Same-store sales fell 4.9%, accelerating from a 4.2% drop a quarter earlier. Guess? now anticipates adjusted earnings between 42 cents and 52 cents a share for its January-ending fiscal year. It had previously targeted adjusted earnings of 62 cents to 75 cents a share.
Dollar General (DG) tumbled 7% after reporting disappointing same-store sales and earnings for its recent quarter. The discount retailer reported a 0.1% decline in same-store sales, below an expected increase of 0.8%. The company said a weaker quarterly performance was tied to reductions in food-stamp benefits.
Parker Hannifin (PH) agreed to purchase filtration-systems company Clarcor (CLC) in a deal worth around $4 billion. Parker agreed to pay $83 for each Clarcor share outstanding, an 18% premium to the closing price Wednesday of Clarcor. The deal is expected to close during the September-ending quarter next year. Clarcor shares jumped 16% in premarket trading to $82.08.