U.S. Stocks Off to Fastest Start Since 1987; Oil Hits Three-Year High
U.S. equities continued higher on Tuesday, with the Dow Jones Industrial Average recording its best start to a year since 1987.
Record Gains Continues
All of Wall Street’s major indexes finished at records Tuesday. The Dow Jones 30 rose 102.80 points, or 0.4%, to cos at 25,385.80. Sixteen of 30 index members finished higher.
The broader S&P 500 Index climbed 0.1% to 2,751.29, its sixth straight record close. The technology-heavy Nasdaq Composite Index finished 0.1% higher at 7,163.58.
The CBOE VIX Volatility Index rose for a second straight session, and closed in double digits for the first time since Dec. 29. However, the fear gauge continues to trade at roughly half the historic average.
A low VIX signals complacency in the market, an environment that supports the bulls. The Vol index finished at 10.08 on a scale that goes to 100.
Though still in an uptrend, stocks exhibited much more divergence on Tuesday, with only four of 11 S&P 500 sectors rising. Health care stocks, financials and industrials rose sharply, but were partially offset by sharp declines in telecommunication services and utilities.
With the latest advance, the benchmark indexes have returned between 2.8% and 3.9% this year.
Crude Hits Three-Year High
Oil prices resumed their upward trajectory on Tuesday amid geopolitical risks and renewed concern over possible supply disruptions in the Persian Gulf. Market participants are still waiting to see whether President Donald Trump will extend U.S. sanctions relief on Iran as part of the 2015 nuclear accord. Reinstating sanctions could put a cap on Iranian oil exports.
U.S. West Texas Intermediate (WTI) for February delivery rose $1.25 cents, or 2%, to $62.98 a barrel. The U.S. benchmark touched a session high of $63.24 a barrel on the New York Mercantile Exchange.
ICE Brent crude, the international futures benchmark, climbed $1.03, or 1.5%, to $68.81 a barrel.
Oil observers on Wednesday will shift their attention to weekly inventory data, with the U.S. Energy Information Administration (EIA) scheduled to release its latest report in the morning. Analysts are expecting a weekly drawdown of 4.1 million barrels.
Strong Earnings Expected
Investors are bracing for the start of corporate earnings season, with financial giants BlackRock (BLK), J.P. Morgan Chase (JPM) and Wells Fargo (WFG) expected to report later this week.
Analysts at FactSet, a financial research firm, expected S&P 500 companies to post a blended earnings growth rate of 10.5% for Q4 2017. All 11 sectors are expected to report year-over-year growth.
On Tuesday, retailing giant Target (T) reported upbeat earnings, including same-store sales growth of 3.4% during the holidays.
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