Banks lead stocks higher as Dow inches closer to 20,000

Big gains for banks and companies focused on travel helped propel U.S. stock indexes to record levels Tuesday. The Dow Jones industrial average moved closer than ever to 20,000, but the symbolic threshold remained just out of reach.

Banks once again led the way as bond yields and interest rates bounced higher. Strong earnings from cruise line operator Carnival and gains for travel website TripAdvisor led consumer companies higher. Household goods makers fell after General Mills cut its sales projections for the year, and energy companies fell for the second day in a row. That hadn’t happened in three weeks. The Dow came within 13 points of the 20,000 mark about half an hour into the session. Trading remained light as the Christmas holiday approached.

Stocks have soared since the presidential election, and the Dow has risen almost 1,000 points in less than a month. Some investors think that means stocks won’t move much in 2017.

“We’re at fair value,” said Scott Wren, a senior global equity strategist at the Wells Fargo Investment Institute. “This is not going to be a big return year for the stock market.”

The Dow climbed 91.56 points, or 0.4%, to a record close at 19,974.62. The Standard & Poor’s 500 index went up 8.23 points, or 0.4%, to 2,270.76. The Nasdaq composite also finished at a record: It rose 26.50 points, or 0.5%, to 5,483.94. The Russell 2000 index of small-company stocks jumped 12.27 points, or 0.9%, to 1,383.96.

Bond prices reversed course, falling Tuesday after climbing Monday. The yield on the 10-year Treasury note rose to 2.56% from 2.54%. Bond yields have risen sharply of late, and that’s good for banks because higher bond yields are linked to higher interest rates, which enable banks to make more money from lending. Regions Financial rose 2.1% to $14.58 and Citigroup advanced 1.9% to $60.80.

Cruise line operator Carnival reported profit and sales that were stronger than expected. The company said bookings for trips in 2017 are stronger than bookings for 2016 trips were at this time last year. It said both ticket sales and prices are up. Carnival stock rose 2.3% to $52.49 and competitor Royal Caribbean rose 3.4% to $85.40.

Travel website operator TripAdvisor jumped 5% to $48.79 after it said it will start adding some Expedia brands to its instant hotel booking platform.

Other consumer companies also gained ground. Used car dealership Carmax leaped 6.1% to $66.16 after a strong earnings report. Consumer-focused companies have outperformed the overall market since the November election, as investors expect them to benefit from a possible pickup in economic growth. But the sector has lagged behind the overall market in 2016 after a large gain a year ago.

Cheerios and Pillsbury roll maker General Mills fell 2.6% to $61.45 after it cut its sales outlook for the year. The Minnesota company and many of its competitors have struggled as more Americans stay away from processed foods. Other household goods makers, such as Tyson Foods and Kraft Heinz, also traded lower. Beer and wine maker Constellation Brands slid 4% to $150.45 after it completed the sale of its Canadian wine business.

Retailer Fred’s soared 81.1% to $20.19 after it agreed to buy 865 Rite Aid pharmacies for $950 million. That’s a huge expansion for Fred’s, which had 648 total stores at the end of October. Only about half of them had pharmacies.

The sale of the pharmacies may also clear the way for Walgreens Boots Alliance, the largest U.S. drugstore operator, to buy Rite Aid. That $9.4-billion deal was announced more than a year ago. Rite Aid shares climbed 5.4% to $8.61 and Walgreens edged up 0.3% to $86.28. If the two sales close, Fred’s will become the third-largest drugstore chain in the U.S.

Read more: Walgreens and Rite Aid are selling 865 stores so they can close their $9.4-billion deal »

Industrial gas company Praxair slid 3.7% to $118.39 after it said it will combine with Germany’s Linde in an all-stock deal. The combined company will be worth some $65 billion, the firms said. Linde and Praxair began talking about a possible deal in August, but a few weeks later Linde said they’d failed to agree on details.

Benchmark U.S. crude rose 11 cents to $52.23 a barrel. Brent crude, the international standard, jumped 43 cents to $55.35 a barrel. Wholesale gasoline rose 3 cents to $1.59 a gallon. Heating oil stayed at $1.67 a gallon. Natural gas fell 13 cents, or 3.8%, to $3.26 per 1,000 cubic feet.

The dollar, which has been trading at 14-year highs, continued to gain strength. It climbed to 118.04 yen from 117.24 yen. The euro fell to $1.0377 from $1.0404.

Gold slid $9.10 to $1,133.60 an ounce. Silver rose 3 cents to $1.12 an ounce. Copper held steady at $2.50 a pound.

The CAC-40 in France rose 0.6%. Britain’s FTSE 100 finished up 0.4% and the German DAX advanced 0.3%. Japanese stocks reached another fresh high for the year after the Bank of Japan left its monetary policy unchanged and said the “moderate recovery” of the world’s third-largest economy was on track. The Nikkei 225 index advanced 0.5%. South Korea’s Kospi rose 0.2%. Hong Kong’s Hang Seng index fell 0.5%.

ALSO

Hospitals turn to disposable scopes to fight superbug infections

Inside music mogul Russell Simmons’ plan to create a hip-hop video empire

Column: Soaring insulin prices highlight the futility of a ‘free market’ for meds

UPDATES:

2:15 p.m.: This article was updated with closing prices, context and analyst comment.

9:35 a.m.: This article was updated with market information and context.

This article was originally published at 6:50 a.m.