S&P, Nasdaq hit record highs as volatility drops

Traders work on the floor of the New York Stock Exchange in New York, US, on May 3, 2017.
Traders work on the floor of the New York Stock Exchange in New York, US, on May 3, 2017.PHOTO: REUTERS

NEW YORK (REUTERS) - The S&P 500 and the Nasdaq hit record intraday highs for the second day in a row on Tuesday as market volatility dropped to a decade low following Emmanuel Macron's victory in the French presidential election and strong US corporate earnings.

The VIX, Wall Street's "fear gauge", hit 9.57 points, the lowest since late 2006, a day after closing at its lowest level in over two decades. A falling VIX typically indicates a bullish outlook for stocks.

The 10-year US Treasury yield rose to its highest in a month, while gold prices fell, indicating a shift in investor preference for riskier assets.

At 9:34 a.m. ET (9:34p.m. Singapore time), the Dow Jones Industrial Average was up 21.5 points, or 0.1 per cent, at 21,033.78. The S&P 500 was up 2.57 points, or 0.11 per cent, at 2,401.95, slightly below its all-time high of 2,402.42. The Nasdaq Composite was up 11.72 points, or 0.19 per cent, at 6,114.38, after hitting an all-time high of 6,116.47.

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Five of the 11 major S&P sectors were higher, while the typically defensive plays such as utilities and telecom services fell.

Since Donald Trump's election in November the S&P 500 has risen nearly 14 per cent, raising questions about market valuations. However, solid first-quarter earnings could allay some of those fears.

S&P 500 earnings on average have grown 14.4 per cent, up from 10.1 per cent estimated at the start of the earnings season, according to Thomson Reuters I/B/E/S