Stocks close up, lifted by tech companies and banks
U.S. stocks rose Monday as big technology companies such as Apple continued to rally. Investors bought stocks and sold bonds and gold after Congress agreed to a deal that will keep the government operating for the rest of the fiscal year.
Technology companies have set the pace all year and are up more than twice as much as the rest of the market. Apple and Facebook, which will report their first-quarter results this week, helped lead the way.
Investors were relieved that the threat of a government shutdown appears to have been averted, so they bought riskier stocks and sold government bonds, gold and high-dividend stocks. The VIX, an index that is seen as a measure of the market’s anxiety level, fell to its lowest level since February 2007.
Technology companies and banks have stood out in the first quarter, said David Schiegoleit, the head of investments at U.S. Bank’s Private Client Reserve. He said many different types of technology companies are doing well, especially ones that cater to consumers. A key reason is that after years of trouble, economies outside the U.S. are improving.
“Emerging market economies are starting to get better momentum, and we’re also starting to see some pretty decent activity out of Europe,” he said. “All the different major components of the technology sector are posting double-digit [earnings] gains.”
The Standard & Poor’s 500 index rose 4.13 points, or 0.2%, to 2,388.33. The Dow Jones industrial average fell 27.05 points, or 0.1%, to 20,913.46 as Boeing and IBM lagged.
Thanks to the gains for technology companies, the Nasdaq composite jumped 44 points, or 0.7%, to 6,091.60, and set another record high. The Russell 2000 index of small-company stocks climbed 6.93 points, or 0.5%, to 1,407.36.
Analysts expect first-quarter earnings for technology companies and banks to rise 19% from the same period last year, according to S&P Global Market Intelligence. Most banks have already released their results, but dozens of technology companies have yet to report.
Shares of Apple climbed 2.1% to $146.60 and Facebook advanced 1.5% to $152.46. Microsoft, which disclosed its earnings last week, rose 1.4% to $69.41.
Online retailer Amazon.com stood out among consumer-focused companies, rising 2.5% to $948.43.
Late in the weekend, Congress unveiled a spending bill that would fund most government operations through September. The House is scheduled to vote on the bill Wednesday. The bill does not include funding for the border wall President Trump has proposed, and it rejects his proposed cuts to popular domestic programs.
Investors felt reassured and sold bonds. The yield on the 10-year Treasury note rose to 2.32% from 2.29%. That sent interest rates up, which enables banks to charge higher interest rates on loans. Shares of Capital One Financial rose 1.5% to $81.57 and Citizens Financial rose 1.5% to $37.13.
Investors sold high-dividend stocks including utilities, phone companies and makers of household goods.
Aerospace companies struggled after aircraft parts distributor Wesco Aircraft Holdings gave a weak second-quarter forecast and said its president and chief executive retired. Wesco tumbled 18.1% to $9.95. Boeing fell 1.3% to $182.39, and aircraft and helicopter maker Textron fell 1.1% to $46.13.
Industrial companies lagged behind the rest of the market after a report that output by U.S. factories didn’t grow as much as analysts expected. The Institute for Supply Management said new orders and hiring grew more slowly in April.
Tribune Media jumped 6% to $38.75 after the Financial Times reported that 21st Century Fox and Blackstone may make a joint takeover bid for the company. Tribune Media has stakes in Food Network and the WGN cable network and owns TV stations, including KTLA in Los Angeles. Sinclair Broadcast Group is also reported to be interested in buying Tribune.
Read more: Tribune Media shares jump on reports of Fox-Blackstone takeover bid »
Investment management company AllianceBernstein slid 3.3% to $22.15 after it replaced Peter Kraus as chairman and CEO and removed nine of its 11 board members. Kraus had led the company since 2008. The company named a new non-executive chairman and separate CEO, and named six new directors.
Ensign Group climbed 6.8% to $19.17 after the Mission Viejo provider of nursing and rehabilitative care reported more revenue than investors expected.
Benchmark U.S. crude fell 49 cents, or 1%, to $48.84 a barrel in New York. Brent crude, used to price international oils, declined 53 cents, or 1%, to $51.52 a barrel in London.
Wholesale gasoline fell 2 cents to $1.53 a gallon. Heating oil fell 2 cents to $1.49 a gallon. Natural gas fell 6 cents to $3.22 per 1,000 cubic feet.
Gold fell $12.80, or 1%, to $1,255.50 an ounce. Silver fell 42 cents, or 2.4%, to $16.84 an ounce. Copper rose 5 cents, or 2%, to $2.66 a pound.
The dollar rose to 111.83 yen from 111.44 yen. The euro rose to $1.0906 from $1.0895.
Many markets in Asia and Europe were closed for May Day. Japan’s benchmark Nikkei 225 was an exception, and it gained 0.6%. Stocks in Japan were helped by a weaker yen and strong readings in a manufacturing survey.
UPDATES:
3:25 p.m.: This article was updated with closing prices, context and analyst comment.
9:15 a.m.: This article was updated with market prices and context.
This article was originally published at 7:05 a.m.
