The Dow Jones Industrial Average on Friday notched a second straight all-time high, but a slump in megacapitalization technology and internet-related stocks weighed on the broader market, pressuring the Nasdaq.
Where are the major benchmarks trading?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.17% rose 75.67 points, or 0.3%, to 26,732, after logging its first all-time high on Thursday since Jan. 26. However, the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.39% edged, lower, closing 1.27 points to 2,929.48, a rise of less than 0.1%, after the broad-market benchmark posted its first record since Aug. 29. The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.34% , which remains about 2% below record levels, fell 41.28 points to 7,986.96, a decline of 0.5%.
For the week, the Dow is up 2.3% and on booked its biggest weekly percentage gain since July. The S&P 500 rose 0.9%. Both the Dow and the S&P recorded their second straight weekly gain, as well as their 10th positive week of the past 12. The Nasdaq ended with a 0.3% weekly fall.
Both the S&P and the Nasdaq have hit multiple records over the past few months, thanks in large part to the outperformance of technology and internet stocks. While Apple fueled the Dow’s advance to all-time highs on Thursday, this is a sector the average has less exposure to, a factor that has limited its gains until recently, when industrial stocks have started to lead the market.
What’s driving the market?
Markets have been grinding higher in a low-volatility market for several weeks. The gains have largely been supported by improving economic data, which have pointed to strong economic fundamentals, particularly in contrast to other regions, where stocks have been struggling.
On Thursday, gains came as jobless claims dropped to their lowest since November 1969, a sign of an extremely strong labor market. Separately, the Philadelphia Fed manufacturing index jumped more than expected in September, while an Index of Leading Economic Indicators suggested the U.S. economy could look forward to 3% economic growth in the second half of 2018.
In the latest data, a reading on the manufacturing sector rose to 55.6 in September from the previous reading of 54.7. A report on the services sector dipped to 52.9 from 54.8. Both are from IHS Markit.
These signs of economic strength have been enough for investors to ignore persistence evidence of escalating tensions between the U.S. and China—among other regions—on trade policy. President Donald Trump has announced nearly $500 billion in tariffs on Chinese goods this week; China retaliated with measures of its own and said it would introduce more if the U.S. tariffs take effect.
While many investors are concerned that the trade issue could escalate into a full-blown trade war, they have so far been heartened by the fact that the issue hasn’t shown much impact in economic data or corporate results. Furthermore, some market watchers have said that recent developments haven’t been as severe as expected, leaving room for optimism.
South Korean Finance Minister Kim Dong-yeon expressed optimism about signing a revised U.S. free-trade pact into law, though lawmakers in Seoul have threatened to block the deal if Washington imposes new tariffs on Korean autos and auto parts.