Wall St closes at record high

The Dow passed its August peak as investors hoped for fiscal stimulus and lower taxes under President Trump.

Investors are focusing on the implications of a Trump presidency. Picture: AP Photo/Richard Drew.

Investors scooped up shares of big banks and industrial companies for a second straight day, with the Dow Jones Industrial Average closing at a record high.

But European stocks fell as investors sold off dividend-paying stocks that appeared less attractive after a rise in US bond yields.

The Australian share market looks set to shrug off Wall Street’s gains, with ASX futures down eight points at 8.15am (AEDT).

The gains in US-based manufacturing and defense companies -- on expectations of greater government spending under president-elect Donald Trump -- came at the expense of real-estate firms and utilities, which slid alongside government bond prices.

Investors have been betting that fiscal spending and tax cuts under a Trump administration could mean more inflation and push up bond yields.

Financials and pharmaceutical companies also led the stock rally, partly on bets that the new administration could loosen regulation. Health-care companies sold off sharply heading into the election.

The Dow industrials rose 218 points, or 1.2 per cent, to 18808, breaking its previous closing record of 18636 hit Aug. 15. The index is up more than 5 per cent this week.

“Optimism took over and it continues to be the market’s mantra,” said Brian Nick, chief investment strategist at TIAA Global Asset Management. “Optimism about the agenda, optimism about growth moving forward. The market is looking to 2017 and saying, ‘maybe we’ll have the right mix of taxes and growth.’”

The S&P 500 added 0.2 per cent, putting its weekly gains at 4 per cent.

The Nasdaq Composite fell 0.8 per cent as shares of technology companies tumbled.

Traders and analysts said a host of factors contributed to the tech’s declines, from investors selling prior winners -- the tech sector in the S&P 500 was up more than 10 per cent in 2016 as of Wednesday’s close -- to concerns about the potential for stricter immigration policies.

“Immigration is a huge component for how these companies attract and retain talent,” said Daniel Morgan, senior portfolio manager at Synovus Trust Co.

Some of the biggest decliners included Apple, Facebook, Google parent Alphabet and Amazon.com, which all shed about 2 per cent. The tech sector of the S&P 500 fell 1.6 per cent.

Utilities also suffered, falling 2.5 per cent in the S&P 500, as investors pulled back from bonds and their stock-market proxies. The yield on the 10-year US Treasury note rose to 2.113 per cent, according to Tradeweb, from 2.070 per cent on Wednesday.

Financial shares in the S&P 500 rose 3.7 per cent, adding on Wednesday’s gains, catapulting their week-to-date gains to 11 per cent. Goldman Sachs Group and J.P. Morgan Chase & Co. were among the biggest gainers in the Dow industrials.

In Europe, shares of UBS Group gained 8.7 per cent, while Credit Suisse added 4.9 per cent. The Stoxx Europe 600 fell 0.3 per cent.

The moves followed steep gains in Asian markets, which had closed Wednesday with losses before a sudden reversal in risk sentiment across the globe.

The Shanghai Composite Index added 1.4 per cent, Hong Kong’s Hang Seng added 1.9 per cent, and Australia’s S&P/ASX 200 rallied 3.3 per cent. Japan’s Nikkei Stock Average climbed 6.7 per cent on Thursday in its best day since February, as the market reversed an initial selloff following the surprise outcome of the US presidential race.

“At this point, investors are basically still flying blind,” said Abi Oladimeji, chief strategist at Thomas Miller Investment in London. “The reality is we don’t know what a Trump presidency will look like in terms of the policies that are actually carried forward.”

At the moment, investors are focused on the shorter-term positives such as the boost to nominal growth from infrastructure spending, while overlooking the risks of a more protectionist stance on global trade, he said.

Dow Jones