Wall Street starts year on strong note; Nasdaq ends above 7,000

NEW YORK (Reuters) – U.S. stocks rose on Tuesday in the first session of the new year, pushing the Nasdaq to close above 7,000 for the first time, as investors were optimistic that 2018 will bring more gains for the market.

The S&P 500 also ended at a record high. Technology drove the day’s gains, but consumer discretionary, healthcare, energy and materials sectors were also up more than 1 percent each.

Apple (AAPL.O), Facebook (FB.O), Alphabet (GOOGL.O) and Microsoft (MSFT.O) pulled the technology index .SPLRCT up 1.4 percent, following a 37-percent surge in 2017 that made it the best-performing S&P sector.

Major stock indexes had closed out 2017 with their best performances since 2013. Many investors say the rally could continue this year with help from the recently approved U.S. tax overhaul that is anticipated to boost profits as well as the economy.

“We’re off to the races once again,” said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco.

“I don’t expect the kind of moves we saw last year. But as long as monetary policy stays the way it is … my view is stocks are going to have a decent year. And fiscal policy has become stimulative, as well, given the tax bill.”

The Dow Jones Industrial Average .DJI rose 104.79 points, or 0.42 percent, to 24,824.01, the S&P 500 .SPX gained 22.18 points, or 0.83 percent, to 2,695.79 and the Nasdaq Composite .IXIC added 103.51 points, or 1.5 percent, to 7,006.90.

“Our best guess is the first quarter or half of the year can be OK as a continuation of last year,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

FILE PHOTO: The trading floor is seen on the final day of trading for the year at the New York Stock Exchange (NYSE) in Manhattan, New York, U.S., December 29, 2017. REUTERS/Andrew Kelly

But, he said, “valuations are still stretched, interest rates are still rising, and those will provide headwinds to the market at some point.”

The S&P consumer discretionary index .SPLRCD was up 1.5 percent, helped by a gain in Amazon.com (AMZN.O) of 1.7 percent.

J.C. Penney (JCP.N), Nordstrom (JWN.N) and Kohl’s (KSS.N) climbed after a bullish Citigroup note on the retail sector detailed benefits from the corporate tax cuts.

Energy shares were up even though oil prices dipped. Oil hovered near mid-2015 highs amid large anti-government rallies in major exporter Iran and ongoing supply cuts led by OPEC and Russia. The S&P energy index .SPNY rose 1.8 percent.

Shares of casino operators Wynn Resorts (WYNN.O) and Melco Resorts & Entertainment (MLCO.O) were down after a report showed lower-than-expected rise in Macau gambling revenue in December.

Abbott Labs (ABT.N) jumped 3 percent and hit an intraday record of $59.20 after two brokerages upgraded the company’s stock to “overweight.”

Shares of Allstate (ALL.N) were down 2.7 percent on a brokerage downgrade.

Advancing issues outnumbered declining ones on the NYSE by a 1.64-to-1 ratio; on Nasdaq, a 2.01-to-1 ratio favored advancers.

About 6.6 billion shares changed hands on U.S. exchanges. That compares with the 6.3 billion daily average for the past 20 trading days, according to Thomson Reuters data.

Additional reporting by Sruthi Shankar in Bengaluru; Editing by Nick Zieminski and Alistair Bell

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