U.S. stocks extended gains on Monday, with major indexes closing at records for a third session in a row as financial and industrial stocks paved the way to higher ground.
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -1.62% gained 142.79 points, or 0.7%, to finish at 20,412.16. The S&P 500 /zigman2/quotes/210599714/realtime SPX -1.72% advanced 12.15 points, or 0.5%, to end at 2,328.25. The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP -1.80% climbed 29.83 points, or 0.5%, to close at 5,763.96.
“Even though we have social unrest and building geopolitical tensions, the market refuses to fall in any meaningful fashion, which means there remains a very strong underlying bid in the market,” said Adam Sarhan, chief executive officer of 50 Park Investments. “This is due to a confluence of a few factors, including the earnings recession being over, a very strong bull market, and the hope for future prosperity under the pro-growth policies of the new administration.”
Gains have been pronounced since Donald Trump’s presidential election victory in November, and the latest move higher was pegged to the president hinting that he would announce a tax plan in the near term.
“All started last week on the announcement that President Trump will announce a significant tax reform program along the same lines of President Reagan over 30 years, a tax reform program that produced a 4% growth rate,” said Kent Engelke, chief economic strategist at Capitol Securities Management Inc.
While Trump has not revealed details, he had advocated for massive corporate tax cuts during his campaign.
“The combination of proposed regulatory and tax reform, stronger than expected earnings amplified by growing consumer sentiment that President Trump will accomplish a large portion of his agenda has permitted stock to rise to valuations not experienced since 2004,” Engelke said.
Analysts said investors are also relieved that Trump has taken a softer stance toward China and Japan, key trading partners.
Banks have been the biggest beneficiaries of the postelection rally, with investors betting they will benefit from both deregulation and an environment with rising interest rates. Industrial stocks have gained on hopes that a massive infrastructure deal, which Trump also touted during the campaign, would increase demand for the sector.
Goldman Sachs Group Inc . /zigman2/quotes/209237603/composite GS -3.50% gained 1.5% and J.P. Morgan Chase & Co . /zigman2/quotes/205971034/composite JPM -1.86% added 1.3%, while heavy machinery maker Caterpillar Inc . /zigman2/quotes/203434128/composite CAT -3.70% rose 2.3% as one of the biggest advancers on the Dow.
A meeting between Trump and Canadian Prime Minister Justin Trudeau had no significant impact on the U.S. market. The Canadian benchmark /zigman2/quotes/210598478/delayed CA:GSPTSE -2.75% was up 3.1%, extending gains from last week.
That the two leaders did not surprise the markets is a good thing, according to Colin Cieszynski, chief market strategist at CMC Markets.
“The two leaders have significant policy differences in areas like climate change and immigration, but trade between the U.S. and Canada is so huge it’s really important that they focus on business and not get caught up in other areas. The less drama the better, from a market perspective,” he said.
Investors may get some additional market-moving news on Tuesday with Federal Reserve Chairwoman Janet Yellen to testify to the Senate Banking Committee at 10 a.m. Eastern. Economists largely expect her to reiterate the central bank’s cautious stance on monetary policy.
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Shares in Verizon Communications Inc. /zigman2/quotes/204980236/composite VZ -1.03% fell 0.9% as the nation’s biggest wireless carrier started selling unlimited data plans again. It’s the first time Verizon has offered such a service since 2011, signaling that intense competition is forcing the telecom to change its strategy.
Other markets: European stocks /zigman2/quotes/210599654/delayed XX:SXXP -0.50% rose and Asian markets closed higher. Oil fell sharply while gold futures retreated and the ICE U.S. Dollar Index /zigman2/quotes/210598269/delayed DXY +0.34% edged up 0.2%.
--Victor Reklaitis contributed to this report.