Stocks erase morning losses, continuing strong start to year
The Standard & Poor’s 500 index dipped at the start of trading and appeared to be on pace for its first down day of the year. But strengthening gains for utilities and other dividend-paying stocks helped to offset losses in the health care industry, and put the S&P 500 on pace for its fifth straight up day.
KEEPING SCORE: The S&P 500 was up 4 points, or 0.2 percent, at 2,747, as of 2:20 p.m. Eastern time.
The Dow Jones industrial average was close to flat at 25,297, and the Nasdaq composite was up 21 points, or 0.3 percent, to 7,158.
A STRONG START:
Stocks have had a stellar start to 2018, and the S&P 500 is in the midst of its longest winning streak to lead off a year since 2010.
Looking back further, the market has been on a remarkably smooth upward climb for more than a year as economies around the world finally are growing in sync and corporate profits rise.
“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 due to the trends, even though the market is more expensive than it usually is relative to corporate profits.
“Everyone is talking about the synchronized economic growth, but it’s something we haven’t seen for 10 years here.”
Kohl’s jumped to one of the biggest gains in the S&P 500 after it raised its earnings forecast for the year. The retailer said its sales jumped nearly 7 percent in November and December from a year earlier, and its new profit forecast easily topped Wall Street’s expectations.
Kohl’s rose $2.92, or 5.4 percent, to $57.28.
Shares of GoPro plunged after it said its revenue fell sharply last quarter. The company had to slash prices on cameras to drive more sales, and it reported preliminary fourth-quarter revenue that fell far short of Wall Street’s expectations.
The stock lost 84 cents, or 11.2 percent, to $6.68. Earlier in the day, it was down as much as 33 percent.
GoPro also said it will cut more than 20 percent of its workforce.
A deluge of companies is set to begin reporting their results for the last three months of 2017, with the pace picking up later this week. Analysts and investors will likely be more focused on what CEOs 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. Stocks tend to track the trend of corporate profits more than anything else over the long term.
“There will be winners and losers, but broadly it should be supportive,” Adams said.
The yield on the 10-year Treasury dipped to 2.47 percent from 2.48 percent late Friday. The two-year yield slipped to 1.94 percent from 1.96 percent, and the 30-year yield rose to 2.82 percent from 2.81 percent.
Lower rates tend to make dividend-paying stocks more attractive to investors looking for income. Utility stocks, which pay some of the market’s biggest dividends, rose 0.7 percent for the biggest gain among the 11 sectors that make up the S&P 500.
South Korea’s Kospi index rose 0.6 percent, and the Hang Seng in Hong Kong gained 0.3 percent.
In Europe, France’s CAC 40 rose 0.3 percent, and Germany’s DAX was up 0.4 percent. The FTSE 100 in London dropped 0.4 percent.
The dollar slipped to 113.04 Japanese yen from 113.14 yen late Friday. The euro fell to $1.1960 from $1.2050, and the British pound slipped to $1.3562 from $1.3565.
Benchmark U.S. crude rose 29 cents to settle at $61.73 per barrel. Brent crude, the international standard, gained 16 cents to settle at $67.78 per barrel.
Gold fell $1.90 to $1,320.40 per ounce.