Stocks Close at New Highs—Again. What’s Next. – Barron’s


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The S&P 500 and Nasdaq hit record highs on Monday.

(Photo by Angela Weiss/AFP via Getty Images)

Stocks rose to new all-time highs on Tuesday as economic data beat estimates. 

The  Dow Jones Industrial Average rose 9 points, or 0.03%. The  S&P 500 rose 0.03% and closed at a record 4,291.90. The  Nasdaq Composite  rose 0.2%, also closing at a new high of 14,528.33.

“While plenty of good news is now priced into markets, and we advise investors to brace for bouts of volatility ahead, we don’t see record highs as a barrier to further gains,” writes Mark Haefele, UBS’ chief investment officer of global wealth management.

The Case-Shiller U.S. home-price index for April rose 14.6% year over year, the fastest annual rate in more than 30 years. The index is a key point of interest as investors look for clues about what might prompt the Federal Reserve to potentially raise interest rates

Fed members are discussing reducing the size of the mortgage bond buying program, which currently sits at $40 billion a month. Those purchases keep mortgage bond prices high and their yields low, stimulating housing demand.

The consumer confidence index rose to 127.3 for June, higher than the anticipated 118.7 and last month’s 120. As states reopen and the employment picture brightens, consumers are increasingly confident, often a signal that spending will be strong ahead. The Invesco S&P 500 Equal Weight Consumer Discretionary Exchange-Traded Fund (RCD) gained 0.38%, outperforming the major benchmarks.

Looking ahead, “Markets may find little direction ahead of Friday’s jobs report,” writes Citigroup economist Andrew Hollenhorst. Investors are hoping that recent supply shortages aren’t derailing the employment and economic recovery, but that a potentially strong jobs result won’t suggest high enough inflation to make the Fed more willing to lift rates. 

In Asia, Tokyo’s Nikkei 225 fell 0.8%, while Hong Kong’s Hang Seng declined 0.9%. The Shanghai Composite dipped 0.9%. The FTSE 100 in London lifted 0.2% as the pan-European Stoxx 600 was 0.3% higher. The CAC 40 in Paris climbed 0.1% and Frankfurt’s DAX rose 0.9%.

In Europe, the reflation trade surged back, with shares in mining, industrial, and financial companies adding buoyancy to major indexes. Meanwhile, the European Commission’s economic sentiment indicator reflected a notable acceleration in economic activity at the end of the second quarter of 2021, rising in June to the highest level in 21 years.

Mortgage lender Nationwide said that British house prices rose 13.4% in June compared with the same period last year—the largest annual rise since 2004. U.K. housebuilder stocks rallied on the news, with shares in Persimmon, Taylor Wimpey, and Barratt Developments at the top of the list of the FTSE 100’s risers.

Shares in French electric company Rexel rose 4.3% in Paris trading after the group raised its sales forecast for 2021. Rexel now expects same-day sales growth of between 12% and 15%, up from a prior forecast of between 5% and 7%.

Morgan Stanley  (ticker: MS) stock gained 3.35% after the bank doubled its dividend payment to 70 cents a share. 

Textron  (TXT) stock gained 0.54% after getting upgraded to Overweight from Equal Weight at Morgan Stanley. 

Keurig Dr Pepper   (KDP) stock gained 1.03%. Wells Fargo upgraded the stock to Overweight from Equal Weight. 

Fortinet  (FTNT) stock dropped 1.55% after being downgraded to Neutral from Buy at Monness Crespi & Hardt. 

Carvana (CVNA) stock dropped 1.23%. Piper Sandler downgraded the company to Neutral from Overweight. 

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com