The Dow Jones Industrial Average scored a new record close with modest gains on Thursday as another rally in the banking and energy sectors offset weakness in tech.
The Dow climbed 0.36% to 19,191, surpassing last Friday's record of 19,152. However, the S&P 500 closed down 0.35%, and the Nasdaq fell 1.36%.
Tech names have been under pressure in recent sessions as sector rotation benefited energy and financials and disadvantaged high-momentum movers. Facebook (FB) , Amazon (AMZN) , NvidiaA (NVDA) and Microsoft (MSFT) were all lower, while the Technology SPDR ETF (XLK) slid 2.1%.
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.
Mnuchin and Ross both "need to be confirmed by the Senate, which looks likely as the appointments will need only a simple majority, which the Republicans have," BNP Paribas analysts wrote in a note. "Both Mr Mnuchin and Mr Ross have voiced support for Mr Trump's plans to cut tax, roll back regulation and renegotiate trade deals."
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 1.7%.
Crude oil rose Thursday 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.
"The OPEC put its differences to a side and got its act together to resume its traditional role as a price fixer," said Fawad Razaqzada, market analyst at Forex.com. "There's so much upside potential left in the rally, in my view, because the market will now be in balance earlier than would have been the case without a deal."
West Texas Intermediate crude closed 3.3% higher at $51.06 a barrel, its best level since October 19.
Investors also looked toward Friday's jobs report, one of the most closely watched pieces of data of the month. The release is under an even more intense spotlight 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%.
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. The index was broadly stronger with growth seen in new orders, production and employment. A separate reading on manufacturing from Markit Economics' PMI Manufacturing Index showed activity rose to 54.1 in November from 53.9 in October.
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 2.45% on Thursday, its highest level since July last year.
In motor vehicle sales, Ford (F) saw 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.
Express (EXPR) issued 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 by 10% 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 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.