US&P, Dow hit record highs, Nasdaq turns positive for 2016

Traders work on the floor of the New York Stock Exchange (NYSE) on Tuesday.
Traders work on the floor of the New York Stock Exchange (NYSE) on Tuesday.PHOTO: REUTERS

NEW YORK (REUTERS) - The S&P 500 and the Dow hit record intraday highs on Tuesday, while the Nasdaq wiped out its losses for the year, buoyed by increasing prospects of global economic health and with Alcoa getting the US earnings season off to a promising start.

The S&P 500 hit 2,151.96 shortly after the open, breaking past its previous record on Monday. The Dow hit an all-time high of 18,353.76.

Alcoa reported a smaller-than-expected drop in quarterly profit, sending the aluminium producer's shares up 4.7 per cent and helping boost optimism about the earnings season.

Investors appetite for equities has increased after strong economic data and low returns on government bonds, while easing political tensions in Britain and Japan have reduced some global uncertainties.

"There are no good alternatives, from an income standpoint, to the U.S. equity markets at this point, and that's driving the momentum today," said Bill Northey, chief investment officer at Private Client Group of US Bank. "But we need to see some supporting earnings growth to accompany this move."

While profits of S&P 500 companies are estimated to have fallen 5 per cent in the second quarter, mirroring the first, analysts see a return to growth throughout the second half of the year, according to Thomson Reuters data.

Shortly after Wall Street opened, the Dow Jones Industrial Average was up 86.1 points, or 0.47 per cent, at 18,313.03. The S&P was up 11.47 points, or 0.54 per cent, at 2,148.63.

The Nasdaq Composite was up 30.96 points, or 0.62 per cent, at 5,019.60.

Among the 10 major S&P sectors, the traditionally defensive sectors, utilities, telecoms and consumer staples fell.

Oil's bounce off a two-month low boosted materials and energy shares.

Strong corporate reports, along with low expectations for a hike in interest rates anytime soon, should keep the momentum in the market going.

Though Treasury yields are just above record lows, making equities more attractive, they stand to gain as central banks globally, led by Japan and Britain, chart out new stimulus measures.

St. Louis Fed President James Bullard called for only one rate hike in the foreseeable future as the economy enters a period of low growth.

Amazon.com hit a record high of US$757.34 before slipping 0.6 per cent after some customers reported glitches during checkouts on its "Prime Day" shopping event.

Seagate jumped 16.2 per cent to US$28 after the hard-disk drive maker estimated quarterly results that beat analysts' expectations. Rival Western Digital rose 3.5 percent.

Sage Therapeutic soared 42 percent to US$47.69 after its postpartum depression drug succeeded in a study.

Advancing issues outnumbered decliners on the NYSE by 2,160 to 740. On the Nasdaq, 1,957 issues rose and 683 fell.

The S&P 500 index showed 60 new 52-week highs and one new low, while the Nasdaq recorded 135 new highs and eight new lows.