All three benchmark U.S. stock indexes scored record highs again Thursday, unfazed by President Donald Trump’s impeachment, while finding ongoing support from the U.S.-China trade deal, the passage of the USMCA trade deal to replace NAFTA by the House, and improving economic data.
What are stock indexes doing?
The Dow Jones Industrial Average DJIA, +0.49% rose 137.68 points, or 0.5%, to a record 28,376.9 close, while the S&P 500 index SPX, +0.45% gained 14.23 points, or 0.5%, at 3,205.37, its all-time high. The Nasdaq Composite index COMP, +0.67% added 59.48 points, a gain of 0.7%, at 8,887.22, extending its seventh-day winning streak and setting another record.
Year-to-date the Dow is now up 21.65%, the S&P 500 index up 27.86% and the Nasdaq up 33.94%.
On Wednesday, the Dow and S&P 500 snapped a five-day winning streak to end slightly lower. The Dow ended with a loss of 27.88 points, or 0.1%, at 28,239.28, while the S&P 500 gave up 1.38 points, or less than 0.1%, to end at 3,191.14. The Nasdaq Composite held onto a small gain to eke out its fifth-straight record close at 8,827.73, a gain of 4.38 points, or less than 0.1%.
What’s driving the market
While the vote to impeach Trump by the Democratic party controlled House dominated headlines, investors have largely brushed off the proceedings, analysts said. Expectations the Republican-controlled Senate will vote against removing Trump from office have insulated the market against any concerns.
“The market is suggesting right now that it’s meaningless,” said Kent Engelke, chief economic strategist at Capitol Securities Management, of Trump’s impeachment. “Right now, it's all about trade, economic activity and the yield curve at its steepest it’s been for all of 2019. That’s an indicator of greater economic activity in the interim.”
Meanwhile the market remains heartened by the truce in the U.S. - China trade war after last week’s agreement, while recent economic data has tentatively soothed worries over global economic growth.
The Chinese Ministry of Commerce said Thursday that it remains in contact with the U.S. as the text of the deal is drafted, according to Reuters, though it has declined to confirm claims by the Trump Administration that it will involve $32 billion of agricultural purchases beyond the $24 billion of purchases made by the Chinese in 2017, before the trade spat began.
U.S. Treasury Secretary Steven Mnuchin said the deal will be signed in early January, telling CNBC Thursday morning that the deal “is just going through what I would consider to be a technical legal scrub.”
See: The S&P 500 is within striking distance of its best year since 1997
As the market closed, the U.S. House also passed a bill to replace the North American Free Trade Agreement (NAFTA) with the USMCA and is likely to be passed by the Senate in the new year.
Compared to NAFTA, the new treaty aims to help U.S. farmers, ranchers, manufacturers, workers and consumers by opening new markets to American goods and reducing the cost of household staples such as drugs and groceries. It would also shield U.S. industries like autos and steel from what the Trump White House saw as unfair competition.
Meanwhile in U.S. economic data, new applications for U.S. jobless benefits fell during the week ended Dec. 14, dipping 18,000 to a seasonally adjusted 234,000 after surging to 252,000, a two-year high, the week before. The Conference Board’s index of leading economic indicators was unchanged in November, after three months of declines.
“With the reduction in risks from the uncertainty that the American trade war produced in 2019, we’re keeping our fingers crossed that the economy will get some more wind in its sails in 2020 to extend its longest winning run in history,” MUFG chief economist Chris Rupkey said.
Which companies are in focus
Shares of chip maker Micron Technology Inc. MU, +2.81% rose 2.8% Thursday after the memory-chip maker forecast the current quarter would mark the “bottom” of a rough stretch.
Opinion: Micron calls a bottom, but doesn’t say what’s on the other side
Rite Aid Corp. RAD, +42.31% stock surged 42.3% after the pharmacy retailer posted a third-quarter profit that was much greater than analysts expected after reporting a loss in the third-quarter of last year.
Darden Restaurants Inc. DRI, -6.26% reported fiscal second-quarter earnings Thursday morning, with the parent company of Olive Garden missing Wall Street forecasts for earnings-per-share and same-restaurant sales. The stock fell 6%.
Shares of Conagra Brands Inc. CAG, +15.87% rose 15.9% after it reported better than expected earnings and raised its outlook Thursday morning.
Synopsys Inc. SNPS, +1.01% shares rose 1% after the company announced the initiation of a $100 million accelerated share buyback program.
Shares of Match Group Inc. MTCH, +8.58% jumped 8.6% Thursday, after an agreement that will see Match fully separate from the businesses of IAC/Interactive Corp. IAC, +7.78%. The agreement will result in IAC and Mach becoming two independent publicly traded companies.
How did other markets trade?
The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, +0.10% slipped 1.5 basis points to 1.907%, after rising this week amid an uptick in global-growth optimism.
Crude oil settled at its highest level since mid-Sept, with the price of a barrel of West Texas Intermediate crude for January delivery CLF20, +0.61% adding 29 cents, or 0.5% at $61.22. Gold for February delivery GCG20, -0.10% gained $5.70, or 0.4%, $1,484.40 an ounce, its best close in more than two weeks.
The value of the U.S. dollar was virtually unchanged, with the ICE US dollar index DXY, +0.06% holding steady at 97.38. The British pound GBPUSD, +0.1076% fell 0.3% to $1.301 as fears of a hard Brexit returned.
In Asia overnight, stocks closed lower, with the China CSI 300 000300, +0.31% falling 0.1%, Japan’s Nikkei 225 NIK, -0.05% and Hong Kong’s Hang Seng index HSI, +0.37% retreating 0.3% each.
In Europe, stocks ended slightly higher, as reflected by the Stoxx Europe 600 SXXP, +0.17%.