US STOCKS-Dow ends at another record high as Wall Street buoyed by banks, small-caps

SGH

16/10/2024 21:42

* 
      Dow posts third record closing high in four sessions
    

        * 
      Russell 2000, S&P Small Cap 600 at highest levels since
Nov 2021
    

        * 
      Morgan Stanley record high as Q3 profit jumps; banks
buoyant
    

        * 
      Utilities climb; Amazon nuke accord benefits Dominion
    

        * 
      Indexes up: Dow 0.79%, S&P 500 0.47%, Nasdaq 0.28%
    

  
 (Adds closing prices, Dow milestone)
    By David French
       Oct 16 (Reuters) - 
    The Dow Jones Industrial Average rose on Wednesday and
closed at a record high, and Wall Street's two other benchmark
indexes also ended higher, weathering declines in megacap tech
shares thanks to small-caps gains and financial shares buoyed by
strong earnings.
    It was the third time in four sessions the Dow  .DJI  has
recorded a best ever finish, ending above 43,000 points again
and recouping losses from the previous session.
        Also a whisker away from setting another closing
milestone was the S&P 500  .SPX , but ultimately it finished
just short, up 27.21 points, or 0.47%, to 5,842.47 points. 
  
        The Nasdaq Composite  .IXIC  rose 51.49 points, or
0.28%, to 18,367.08. The Dow Jones Industrial Average  .DJI 
advanced 337.28 points, or 0.79%, to 43,077.70.
  
    On a broadly positive day for Wall Street, it was financial
stocks which led the way.
    "I think investors have rotated a little bit out of some of
the big tech companies and into the big financial companies,"
said Michael Kantrowitz, chief investment strategist at Piper
Sandler.
    He said some movement from investors made sense as the rate
environment has become more conducive for bank earnings, while a
lot of optimism around artificial intelligence (AI) is priced
into tech companies.
    Morgan Stanley  MS.N  posted a record close, jumping 6.5%,
after it joined peers such as JPMorgan Chase  JPM.N  in
reporting strong profits following a sharp increase in
investment banking revenue.
    Larger regional banks, traditionally less reliant on
investment banking activities, were also higher. First Horizon
 FHN.N  rose 4.1% and U.S. Bancorp  USB.N  advanced 4.7% after
reporting third-quarter results.
    The broader Banks  .SPXBK  index was up 1.2%, and an index
tracking regional banks  .KRX  gained 1.5%.
    Investors also focused on small-cap stocks, with some
rotation from expensive tech megacaps to less expensive sectors.
    The Russell 2000 index  .RUT  rose 1.6%, and the S&P Small
Cap 600  .SPCY  gained 1.4%. Both had their highest finishes
since November 2021.
    While acknowledging some buying in recent days, Piper
Sandler's Kantrowitz said he was yet to be convinced of a wider
rotation into small caps.
    "I think people are broadening out their portfolio exposure,
but still sticking with the same flavor of fundamentals," adding
people were buying high-quality small-caps but not digging into
the kinds of deep-value names you would expect to attract
attention if the full rotation was underway.
    Among the big-tech names which dragged, Apple  AAPL.O 
dipped 0.9% after hitting a record high in the previous session.
Alphabet  GOOGL.O , Meta Platforms  META.O , and Microsoft
 MSFT.O  all declined between 0.2% and 1.6%. 
    Chip heavyweight Nvidia  NVDA.O , however, bucked the
megacap slide, rising 3.1% after slumping nearly 5% in the
previous session.
    Gains in the so-called Magnificent Seven group of tech
stocks have driven most of Wall Street's record-breaking run
this year. However, with valuations increasingly stretched and a
brighter economic outlook, investors have been seeking
opportunities elsewhere.
    Four of the 11 S&P sectors registered record closing highs:
financials  .SPSY , utilities  .SPLRCU , materials  .SPLRCM  and
industrials  .SPLRCI .
        Utilities led sectoral gains, leaping 2%, with Dominion
Energy's  D.N  5.1% increase among the catalysts after it was
one of the power companies with which Amazon.com  AMZN.O 
announced agreements for developing nuclear technology to power
data centers.
    The second best-performing S&P sectors year to date, Piper
Sandler's Kantrowitz said he remains bullish on utilities as
they benefit from both the higher power demand coming from AI,
but also the lower interest rate environment.
    The economically sensitive Transport index  .DJT  jumped
1.9%, lifted by United Airlines'  UAL.O  best one-day
performance in six months. It gained 12.4% after it forecast
better-than-expected fourth-quarter profit and announced a
$1.5-billion share buyback program on Tuesday. 
    Delta Air Lines  DAL.N  and American Airlines  AAL.O  also
benefited, advancing 6.8% and 7.1%, respectively.
    Attention now turns to more corporate earnings are due
through the week, along with key economic data including the
retail sales and industrial production figures for September on
Thursday.
    Volume on U.S. exchanges was 10.63 billion shares, compared
with the 12.13 billion average for the full session over the
last 20 trading days.

 (Reporting by Lisa Mattackal and Purvi Agarwal in Bengaluru and
David French in New York; Editing by Pooja Desai and David
Gregorio)
 ((LisaPauline.Mattackal@thomsonreuters.com;))