U.S. stocks hold higher; Nasdaq, S&P hit record highs

U.S. stocks traded higher on Tuesday, with the S&P 500 and the Nasdaq new record highs, as investors kept an eye on oil prices.

Both the Nasdaq and the S&P broke above their previous respective all-time intraday highs of 5,231.94 and 2,185.54 in mid-morning trade.

There are “really just very few alternatives for investors around the world,” said Jeff Kravetz, regional investment strategist at the Private Client Reserve at U.S. Bank. “Investors are looking for return and yield, and the U.S is the best option for that.”

The Dow Jones industrial average held about 10 points higher in midday trade ET, paring gains, with Walt Disney contributing the most gains. The benchmark S&P 500 advanced about 0.1 percent higher, led by consumer staples. The Nasdaq composite rose nearly 0.25 percent.

Sentiment is “more risk on than risk off,” said Randy Warren, chief investment officer at Warren Financial. “The play here is that we’re going to have a decent second half.”

Stocks have held in a narrow range recently, and the CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, is trading around its lowest levels in a year. On Tuesday, the VIX traded lower, near 11.4.

“It’s August. There’s not a log of news and we’re done with most earnings,” said Maris Ogg, president at Tower Bridge Advisors. “The difficult thing about this market is valuation. It’s not expensive, but it’s not super cheap, so it’s hard for people to get excited and buy.”

LPL Financial Research said in a Tuesday report the S&P recorded its fourth-tightest trading range of the year on Monday. “What made yesterday even more unique though is the S&P 500 also made an intra-day new all-time high (although it didn’t close at a new high). The last time the S&P 500 made an intra-day new high and traded in a smaller daily range was Christmas Eve 2014,” the firm said.

“I think the path of least resistance is higher,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott. “The rally that we’ve had and the sudden ricochet since the Brexit vote has been eerily steady.”

U.S. crude prices traded about 0.2 percent higher, near $43.10 a barrel, trying to build on Monday’s strong gains.

OPEC said Monday an “informal meeting” between member countries will take place on the sidelines of the International Energy Forum in Algeria next month.

“If we begin to see oil firm up later in the session, I think we can see range-bound trading with a biased to the upside,” in equities, said Peter Cardillo, chief market economist at First Standard Financial.

On the economic data front, second-quarter U.S. productivity fell unexpectedly by 0.5 percent. Economists polled by Reuters expected a gain of 0.4 percent.

“The lack of productivity directly relates to the slow economic recovery seen since the recession. Combine this with a good pace of hiring and higher labor costs as a percent of revenue will only continue to increase,” said Peter Boockvar, chief market analyst at The Lindsey Group.

Wholesale inventories for June rose 0.3 percent, with economists expecting and unchanged reading.

In corporate news, luxury-goods maker Coach posted mixed quarterly results, missing expectations on revenue, but with profits coming in better than expected. Embattled drug maker Valeant Pharmaceuticals, on the other hand, missed Wall Street expectations on both the top and bottom line.

Delta Air Lines, meanwhile, is issuing refunds for canceled flights as well as $200 travel vouchers for certain passengers.

U.S. Treasurys traded slightly higher, with the two-year note yield holding near 0.73 percent and the benchmark 10-year yield around 1.57 percent. Investors will digest a three-year notes auction, scheduled for 1 p.m. ET.

The U.S. dollar traded 0.2 percent lower against a basket of currencies, with the euro near $1.111 and the yen around 102. The British pound fell 0.24 percent against the greenback, and hit a one-month low earlier in the session.

“We’re not seeing gold react to that. Right now, it’s something to look at, but it won’t spark a sell-off” yet, First Standard’s Cardillo said.

The Dow Jones industrial average rose 48 points, or 0.26 percent, to trade at 18,578 with Walt Disney leading advancers and Cisco Systems the greatest laggard.

The S&P 500 advanced 6 points, or 0.29 percent, to trade at 2,187, with consumer staples leading nine sectors higher and energy the only decliner.

The Nasdaq traded 24 points higher, or 0.46 percent, at 5,237.

About nine stocks advanced for every five decliners at the New York Stock Exchange, with an exchange volume of 295 million and a composite volume of 1.482 billion in midday trade.

Gold futures for December delivery rose $4.10 to trade at $1,346.40 per ounce.

Source: CNBC

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