U.S. stocks trade at record highs; oil jumps more than 2%

U.S. stocks edged higher Monday, with the three major indexes hitting new records, as investors kept an eye on oil prices.

“The market is being driven by the same theme,” said Bruce Bittles, chief investment strategist at Baird, referring to low interest rates around the world and the “hunt for yield.”

“Until we get some optimism, the path of least resistance is higher. Nobody likes this market,” he said.

The benchmark S&P 500 and the Nasdaq composite broke above previous intraday highs of 2,188.45 and 5,238.54, respectively, shortly after the open. The Dow Jones industrial average also posted a record high, rising past its previous high of 18,638.34. These records were all set last week, despite the indexes posting just slight weekly gains.

“The fundamental picture has been mixed, so it’s a little bit hard to look to that as the reason for what seems to be a solid rally,” said Bruce McCain, chief investment strategist at Key Private Bank.

He also noted that Democratic nominee Hillary Clinton’s lead in the polls over her GOP counterpart, Donald Trump, may be a contributing factor to the recent rally. “Not to make a statement on which candidate is better, but usually markets prefer for the incumbent party to retain the White House.”

The S&P held about 0.4 percent higher in midday trade ET, with materials leading. Twenty-nine S&P components hit new 52-week highs, including Sysco — which reported quarterly results before the bell, Ross Stores and Procter & Gamble.

“The market should continue to go higher on the no-alternative factor,” said Peter Cardillo, chief market economist at First Standard Financial. “The market is feeding on itself.”

The Dow rose about 80 points, with Boeing and Goldman Sachs contributing the most gains. The Nasdaq held 0.6 percent higher.

“In order to get a big move down, … you need to see some news the market perceives as bad,” said Randy Frederick, managing director of trading and derivatives at Charles Schwab. “We don’t have that right now.”

Despite posting several milestones last week, stocks traded in a relatively narrow range. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near multi-year lows last week. On Monday, it traded about 1 percent higher, near 11.7.

Investors, meanwhile, were watching oil prices as U.S. crude rose more than 2 percent to about $45.60 a barrel in choppy trade. On Monday, Russian Energy Minister Alexander Novak bolstered hopes that oil producing nations could take action to stabilize prices, telling a Saudi newspaper that his country was consulting with Saudi Arabia and other producers to achieve market stability.

“Good luck with that, if investors believe this. The move which we are seeing in the market is the real example how speculations can drive the price action. If you look at the demand equation, we had GDP data from the third biggest economy in the world and it is not something which is praising the demand for oil,” said Naeem Aslam, chief market analyst at Think Markets.

On the data front, the Empire State Manufacturing survey index fell five points to -4.2.

“The lack of even a whiff of volatility, however, prevents me from shifting my outlook from neutral to something more far more negative. The intraday range for the blue chip index has consistently fallen to 0.25-0.50% of the underlying index level. When this statistic falls into this tight band, the blue chips have secured a positive daily return 67.7% of the time since October 2001 compared to 54.5% for all sessions over the same period,” Jeremy Klein, chief market strategist at FBN Securities, said in a Monday note to clients.

Other data released Monday included the NAHB housing index, which showed homebuilder sentiment rose 2 points. The SPDR S&P Homebuilders ETF (XHB) rose about 1 percent, led higher by Toll Brothers, which was up 3 percent.

Investors will also await for the Fed to release the minutes from its July meeting, although Schwab’s Frederick said that he doesn’t expect any big surprises from them.

On the earnings front, several firms, including Home Depot, Lowe’s and Cisco Systems, are scheduled to report results this week.

“Through Friday’s close, 459 companies, or 92%, of S&P 500 have reported 2Q 2016 results,” said Nick Raich, CEO at The Earnings Scout, in a Monday note. “While 71% of those companies are exceeding their 2Q 2016 EPS estimates, 60% have had their 3Q 2016 EPS estimate go lower, on average by -1.79%, after releasing results.”

Last week, retail giant Macy’s posted better-than-expected results.

Overseas, European stocks traded mostly flat, while Asian equities traded mixed, as Japan’s Nikkei 225 fell after its GDP data disappointed, while China’s Shanghai composite rose more than 2 percent on stimulus hopes.

The Dow Jones industrial average rose 90 points, or 0.49 percent, to trade at 18,648, with Intel leading advancers and Johnson & Johnson the biggest decliner.

The S&P 500 gained 9 points, or 0.42 percent, at 2,193, with materials leading eight sectors higher and utilities and telecommunications the only laggards.

The Nasdaq rose 0.61 percent, or 31 points, to 5,264.

About three stocks advanced for every decliner at the New York Stock Exchange, with an exchange volume of 192 million and a composite volume of 849 million.

Gold futures for December delivery rose $3.40 to $1,346.60 per ounce.

Source: CNBC