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Stocks continue their strong start to 2018

The Standard & Poor's 500 index rose 4.56 points, or 0.2%, to 2,747.71. The last time the index led off a year with more consecutive gains was in 2010, when it had six.
(Mark Lennihan / Associated Press)

The stock market’s perfect start to the year rolled on, and the Standard & Poor’s 500 index shook off a bit of weakness Monday to advance further into record territory.

Stocks slipped in early trading, and the S&P 500 appeared to be on pace for its first down day of the year. But accelerating gains for dividend-paying and technology stocks helped offset losses in the healthcare industry, and the index eked out a fifth straight gain. Other U.S. indexes edged higher or held close to their record levels.

“We’re getting a bit tired hearing ourselves talking about the solid economic backdrop and strong earnings growth, but that is the backdrop,” said Jon Adams, senior investment strategist for BMO Global Asset Management.

He is optimistic that stocks can continue to rise from their record levels because of these trends, even though the market is more expensive than it usually is relative to corporate profits. “Everyone is talking about the synchronized economic growth” around the world, he said, “but it’s something we haven’t seen for 10 years.”

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The S&P 500 rose 4.56 points to 2,747.71. The last time the index led off a year with more consecutive gains was in 2010, when it had six.

The Dow Jones industrial average slipped 12.87 points to 25,283.00 and the Nasdaq composite rose 20.83 to 7,157.39. The Russell 2000 index of small-cap stocks edged up 1.80 to 1,561.81.

One of the biggest gains in the S&P 500 came from Kohl’s, which jumped 4.7% to $56.90 after it raised its earnings forecast for the year. The retailer said its sales climbed nearly 7% in November and December compared with a year earlier, and its new profit forecast easily beat Wall Street’s expectations.

High-dividend stocks were also strong, with utilities up 0.9%, the biggest gain of the 11 sectors that make up the S&P 500. They got help from falling Treasury yields, which make dividends more attractive to investors seeking income. The yield on the 10-year Treasury slipped to 2.47% from 2.48% on Friday.

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Nvidia climbed 3.1% to $222 after the chip maker said it will work with Uber to develop the computing system for a fleet of autonomous cars.

On the losing end for stocks was GoPro, which plunged 12.8% to $6.56 after it said its revenue fell sharply last quarter. It also said it would cut more than 20% of its workforce and announced other changes.

GoPro predicts revenue slump, slashes jobs and dumps drones; stock dives »

Dave & Buster’s Entertainment dived 22.3% to $43.79 after the restaurant and arcade chain said sales worsened in December and it cut its income and sales forecasts.

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NuVasive slid 8.9% to $55.56 after the San Diego maker of spinal devices gave a disappointing forecast for 2018.

Earnings are one of the best predictors for the long-term performance of stocks, and a deluge of companies is set to begin reporting their results for the last three months of 2017. The pace will pick up later this week, and analysts and investors probably will be most focused on what chief executives say about their expectations for future earnings.

That’s because Wall Street is looking for profits to rise even higher after Washington approved cuts in corporate tax rates last month. The overhaul of the tax system may help some areas of the market more than others, and investors want to see how much companies will raise their forecasts.

The dollar slipped to 113.07 Japanese yen from 113.14 yen. The euro fell to $1.1965 from $1.2050, and the British pound edged down to $1.3564 from $1.3565.

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Benchmark U.S. crude rose 29 cents to $61.73 a barrel. Brent crude, the international standard, rose 16 cents to $67.78 a barrel.

Natural gas rose 4 cents to $2.84 per 1,000 cubic feet. Heating oil fell 1 cent to $2.05 a gallon. Wholesale gasoline rose 1 cent to $1.79 a gallon.

Gold fell $1.90 to $1,320.40 an ounce. Silver fell 14 cents to $17.14 an ounce. Copper slipped a penny to $3.22 a pound.

In overseas trading, South Korea’s Kospi index rose 0.6%. The Hang Seng in Hong Kong gained 0.3%. France’s CAC 40 rose 0.3%. Germany’s DAX was up 0.4% and the FTSE 100 in London dropped 0.4%.

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UPDATES:

3:30 p.m.: This article was updated with closing prices, context and analyst comment.

7:55 a.m.: This article was updated with market prices and context.

This article was originally published at 7 a.m.

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