Dow ends at record level for second straight day
U.S. stocks rose on Tuesday, 06 December 2016 with the Dow Jones Industrial Average finishing at an all-time high for a second day in a row, as the theme of rotational buying into new leaders such as financials and dividend-rich telecommunication shares continued. The market's momentum, however, was subdued as investors appeared to trade cautiously after the blue-chip's gauge notched an all-time high in the previous session.
The Dow industrials DJIA, +0.18% rose 35.54 points, or 0.2%, to end at 19,251.78. The S&P 500 index gained 7.52 points, or 0.3%, to finish at 2,212.23, only about a point away from its record closing level. The Nasdaq Composite Index added 24.11 points, or 0.5%, to close at 5,333.
Once again, the trading day was very quiet, but once again, that did not stop the market from inching higher. Investor sentiment remained upbeat despite the weekend failure of a constitutional reform referendum in Italy. The country's MIB index surged 4.2% while demand for Italian debt sent Italy's 10-yr yield lower by four basis points to 1.95%.
Equities spent the first two hours of action near their flat lines, but climbed into the afternoon amid gains in most sectors. A few cyclical sectors opened in the red, but only energy remained in negative territory when the closing bell rang.
The ICE U.S. dollar index was trading higher by 0.4% after strong gains in November and early December. Strength in the buck often makes commodities, including gold, less attractive for holders of other currencies.
Economic data at Wall Street on Tuesday included Productivity, Unit Labor Costs, Trade Balance, and Factory Orders. Third-quarter productivity was left unrevised at 3.1% (consensus 3.3%) while Unit Labor Costs were revised up to 0.7% from 0.3% (consensus 0.2%). Higher unit labor costs may not be the best thing for corporate profit margins, yet there is an encouraging element for consumer spending growth since the revision for unit labor costs was driven solely by an increase in hourly compensation growth.
Separately, the trade deficit widened to $42.6 billion in October (consensus -$41.8 bln) from an upwardly revised $36.2 billion deficit (from -$36.4 bln) in September.
Bullion prices ended lower at Comex on Tuesday, 06 December 2016. Gold prices settled lower for a second session as the dollar strengthened against its leading rivals and U.S. stocks traded mostly higherdrawing investors' attention away from the precious metal. Gold investors also remained on the defensive as they faced the strong likelihood of a Federal Reserve interest-rate hike next week and the possibility that monetary policy will tighten at an accelerated pace in 2017, boosting the dollar and cutting demand for the yellow metal.
Gold futures for February delivery fell $6.40, or 0.5%, to settle at $1,170.10 an ounce. The contract fell below $1,160 an ounce briefly on Monday, flirting with levels not seen since February. March silver failed to extend the gains seen over the past three trading sessions, with the contract settling at $16.81 an ounce, down 8.9 cents, or 0.5%.
Crude oil futures finished lower on Tuesday, 06 December 2016 for the first time in five sessions, as some traders anticipated further increases in crude production last month from the Organization of the Petroleum Exporting Countries, despite an agreement to cut back output starting in January.
On the New York Mercantile Exchange, January West Texas Intermediate futures fell by 86 cents, or 1.7%, to settle at $50.93 a barrel. February Brent crude, the global oil benchmark, lost $1.01, or 1.8%, to $53.93 a barrel on London's ICE Futures exchange. Both Brent and WTI posted gains in each of the last four sessions and on Monday, hit their highest levels since July 2015.
The Energy Information Administration will release its weekly data on U.S. petroleum supplies on Wednesday morningafter the American Petroleum Institute's figures, which come out late Tuesday. Market expects a decline of 1.7 million barrels for crude inventories. They also predict a rise of 900,000 barrels in gasoline stockpiles and an increase of 100,000 barrels for distillates, which include heating oil.
Treasuries spent the day inside narrow ranges with modest demand for the 10-yr note sending its yield lower by a basis point to 2.39%.
Today's participation was a bit light as fewer than 860 million shares changed hands at the NYSE floor.
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while October JOLTS will be announced at 10:00 ET. October Consumer Credit (consensus $18.70 billion) will be reported at 15:00 ET.
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