U.S. equities climbed again on Tuesday, pushing the major averages to new record highs as the market’s best run since 1999 — spurred by the surprise victory of president-elect Donald Trump — just keeps getting better.
Trading overall was light as the Thanksgiving holiday approaches and thoughts turn away from fiscal stimulus plans and rate hikes toward turkey dinner and post-election awkwardness with family.
In the end, the Dow Jones Industrial Average gained 0.4%, the S&P 500 gained 0.2%, the Nasdaq Composite gained 0.3% and the Russell 2000 gained 0.9%.
Treasury bonds were little changed, the dollar posted gains and gold finished little changed. Ongoing upward pressure on interest rates lifted the ProShares UltraShort Treasury Bond (NYSEARCA:TBT) to a gain of 27.3% since first recommended to Edge subscribers on Aug. 16.
Crude oil fell 0.4% amid a flurry of OPEC-related headlines. The latest is that a firm decision on a supply freeze deal sketched out at the Algiers meeting in September will be deferred until the high-level meeting on Nov. 30 due to continued opposition from Iran and Iraq. Iran continues to demand a return to pre-sanctions output levels while Iraq wants to keep pumping to fund its fight against ISIS.
Reuters reported that several countries had voiced reservations about a recommended 4% to 4.5% output cut for each country except Libya and Nigeria.
But the overall takeaway form this “technical” committee meeting was positive — despite the feeling this production deal first teased in February may never happen. The Iraqi delegate said they were “agreed and happy” with the outcome. The Libyan delegate said there was a consensus on the path forward.
Rotation into recent laggards continued, with rate-sensitive areas like telecoms and REITs leading the way with gains of more than 2% and 1.7% respectively. Retail stocks were on the move thanks to some post-earnings surges, with Burlington Stores Inc (NYSE:BURL) up 16% and Dollar Tree, Inc. (NASDAQ:DLTR) up 8.2% on better-than-expected results.
Healthcare stocks were the laggards ,down 1.4% as a group. Tenet Healthcare Corp (NYSE:THC) lost 5.1% on a downgrade from Mizuho. FireEye Inc (NASDAQ:FEYE) fell 5.5% on a downgrade from Goldman Sachs. And IT security play Palo Alto Networks Inc (NYSE:PANW) lost 13.2% on a top-line miss and weak guidance.
On the economic front, existing home sales rose 2% in October from September to a seasonally-adjusted annualized rate of 5.6 million. This was ahead of the 5.4 million expected to reach the best level since February 2007. The median price gained 6% from last year to $232,000 with first-time buyers accounting for 33% of total sales.
Stepping back, narrow breadth and the single-mindedness of the post-election move remain concerns. Bespoke Investment Group notes that the S&P 500, the Dow, and the Russell 2000 all ended Monday at least two standard deviations from their 50-day moving averages. The WSJ notes that investor bets on rising short-term U.S. interest rates reached their highest ever at $2.1 trillion.
And questions remain on the ability of the Trump Administration to push their fiscal stimulus plans through the budget hawks in Congress when the Committee for a Responsible Federal Budget estimates they could double the national debt and the Federal Reserve warns of hotter inflation and faster rate hikes.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. A two-week and four-week free trial offer has been extended to InvestorPlace readers.
