Market Snapshot: S&P 500, Nasdaq trade at record levels for fourth straight session

Market Snapshot: S&P 500, Nasdaq trade at record levels for fourth straight session

Stocks traded higher Wednesday, with the S&P 500 and the Nasdaq again trading at record heights, on the back of optimism over the possibility of an imminent trade deal with key ally Canada bolstered sentiment. The U.S. economy’s strength—despite some concern about slack in the housing market—and solid corporate results also laid the groundwork for continued market gains.

Where are the major benchmarks trading?

The Dow Jones Industrial Average DJIA, +0.23% rose 51 points, or 0.2%, to 26,115, coming within 1.9% of its record close set on Jan. 26. The S&P 500 index SPX, +0.59% climbed 14 points, or 0.5%, to 2,912, while the Nasdaq Composite Index COMP, +0.99% added 71 points, or 0.9%, to 8,101.

Stocks ended with marginal gains in Tuesday’s session, but that was enough to give all three major indexes their third straight daily advance, and for both the S&P 500 and the Nasdaq to close at a record for three straight days.

For the month of August, the Dow is up nearly 3%, the S&P 500 is up 3.4%, and the Nasdaq is up 5.6%.

What’s driving the market?

Gains have been fueled by an apparent easing of tensions between the U.S. and other major countries on trade policy.

Late Tuesday, Canadian Foreign Minister Chrystia Freeland met with Trump administration officials in an attempt to resolve testy discussions between the two countries on trade, coming on the heels of the U.S. and Mexico’s announcement of progress toward a bilateral trade agreement that may ultimately result in a retooling of the trilateral North American Free Trade Agreement.

Read: Here’s why the Canadian dollar is holding its ground

The threat of tensions escalating into a full-blown trade war have been a primary driver of market activity in both directions for the past several months. While investors continue to watch the situation, particularly ahead of the latest round of negotiations with China and other major trading partners, stocks have largely looked past the issue of late. Instead, the uptrend in equities has been supported by strong corporate earnings and improvements in economic data.

On Tuesday, a reading of consumer confidence came in at its highest level since October 2000. While this pointed to growing optimism about the economy, a factor that could continue to fuel market gains, high levels of confidence can also be a contrary indicator if it suggests rising complacency about the risks facing stocks.

Read more: Why a trend divergence in the S&P 500 and the VIX may spell trouble for stocks

What data are in focus?

An update to second-quarter gross domestic product came in showing growth at a 4.2% annualized pace, slightly hotter than estimates that matched the initial reading at 4.1%, which represented the fastest pace of expansion in almost four years.

Pending-home sales declined 0.7% in July, the National Association of Realtors said. NAR’s index, which tracks real-estate transactions where a contract has been signed but the deal hasn’t yet closed, fell to a reading of 106.2, missing the consensus forecast of a flat reading.

Read: The 60 events that could rattle investors in the months ahead

What are market experts saying?

“It looks like a revised Nafta agreement between the U.S., Mexico and Canada may be reached shortly. That is giving investors optimism that a U.S.-China trade deal can be worked out in the fall which would remove an obstacle for markets to move higher,” said Jeff Kravetz, a regional investment strategist at U.S. Bank Private Wealth Management.

“Today’s [GDP] estimate should serve as another lesson to shelf geopolitical noise and focus on the fundamentals, which are nothing if not strong,” wrote Mike Loewengart, vice president of investment strategy at E-Trade Financial Corp.

“The breakout to new all-time highs by the [S&P 500] reflects positive momentum across time frames,” said Katie Stockton, managing partner and founder at Fairlead Strategies, in a note. “We expect short-term overbought conditions to be sustained another week or two before a pullback arises,” Stockton said.

What stocks are in focus?

Hewlett Packard Enterprise Co. HPE, +0.21%  shares were flat after rising earlier in the wake of the tech company’s third-quarter results that topped expectations.

Box Inc. BOX, -9.92%  slumped 10% after it gave an earnings and sales outlook that was below expectations late Tuesday.

Cannabis producer Tilray Inc. TLRY, +17.51%  late Tuesday reported second-quarter sales that doubled from the prior year, thanks to the sale of more high-potency weed and extracts. The company’s stock jumped 15%.

Weight Watchers International Inc. WTW, +1.95%  rose 2.1% after an analyst at Oppenheimer initiated coverage of the stock at overweight with a price target of $98. Inc. CRM, +1.11% will be in view ahead of the release of the company’s results, which will be released after the market closes. The results will be studied for the impact of the company’s recent acquisition of MuleSoft, the largest deal in its history. Share of the software-as-a-service company climbed 1.3%.

Also read: Stocks in these 5 tech hardware companies should keep flying high

What other assets are in focus?

European stocks SXXP, +0.29%  ticked slightly higher and Asian markets finished mostly stronger.

Gold futures GCZ8, -0.16%  settled slightly lower, while the ICE U.S. Dollar Index DXY, -0.16% inched down, and U.S. crude-oil futures CLV8, +1.59%  rallied more than 1%.

—Ryan Vlastelica contributed to this report

Providing critical information for the U.S. trading day. Subscribe to MarketWatch’s free Need to Know newsletter. Sign up here.

Related posts