Wall Street surges, fuelled by energy and financials

Wall Street surges, fuelled by energy and financials

NYSE Dec21
Traders work on the floor of the New York Stock Exchange. (Spencer Platt/Getty Images/AFP)

NEW YORK: The three main US stock indices rose on Thursday (Dec 21) as bank and energy stocks climbed and on a continuing boost from the US tax overhaul passed by Congress earlier this week.

Energy and financial stocks led gains among the 11 major S&P sectors. Energy, in particular, has underperformed this year, with a 4.1 per cent loss year-to-date, and some analysts suggested that Thursday's gains reflected an end-of-year rotation to value stocks.

"They're still playing a bit of catch-up," said Chad Morganlander, portfolio manager at Washington Crossing Advisors in Florham Park, New Jersey. "As energy has moved forward, it hasn’t correlated to the price of oil."

Chevron shares jumped 3.5 per cent. The shares earlier touched a record high of US$125.09, after broker Cowen & Co raised its price target on the stock by nearly a third to US$160.

The US Congress approved a US$1.5-trillion tax bill this week that will slash corporate income tax rates to 21 per cent from 35 per cent. Investors are hopeful that the lower rates will companies will spend more on dividends and capital new projects, boosting the overall economy.

"There's still the after-effects of tax reform being passed," said Michael Antonelli, managing director at Robert W. Baird in Milwaukee. "I get the sense that the market is very optimistic about next year."

The Dow Jones Industrial Average rose 55.64 points (0.23 per cent) to 24,782.29, the S&P 500 gained 5.32 points (0.20 per cent) to 2,684.57 and the Nasdaq Composite added 4.40 points (0.06 per cent) to 6,965.36.

Adding to the upbeat sentiment, third-quarter data showed that the US economy grew at its fastest pace in more than two years, powered by robust business spending.

A separate report showed a jump in the number of Americans filing for unemployment benefits last week, but the underlying trend in jobless claims remained consistent with a tightening labour market.

The utilities sector, among sectors likely to benefit the least from tax cuts, fell 1.0 per cent, in a fourth consecutive day of declines.

Shares of Accenture PLC rose 2.0 per cent after the consulting and outsourcing services provider reported a quarterly profit that topped Wall Street forecasts, driven by digital and cloud services business. The shares earlier hit a record high of US$158.44.

Advancing issues outnumbered declining ones on the NYSE by a 1.89-to-1 ratio; on Nasdaq, a 1.84-to-1 ratio favoured advancers.

Source: Reuters