NEW YORK (AFP) - The S&P 500 and Nasdaq ended at records for the fifth straight session on Monday (Jan 8), but the Dow dipped and the 2018 global stocks rally showed signs of petering momentum.
Global stocks were on a tear last week, with Wall Street and key international bourses closing at multi-year or all-time highs amid improving global economic data and optimism about corporate earnings after President Donald Trump signed a big tax cut into law last month.
But the lofty state of the market has started to raise questions about equity valuations, heading into the quarterly earnings season. Gains Monday were generally more modest than last week, and some key markets ended lower.
JPMorgan Chase and Wells Fargo kick off the earnings period for big US corporations on Friday.
"The guidance will be more important than ever," said Art Hogan, chief market strategist at Wunderlich Securities, referring to the corporate statements on expected profit.
Investors so far have not shown much concern about the one-term hit announced by many large companies as they repatriate foreign earnings to the United States, as a result of the recent tax reform.
But sentiment could shift throughout the course of the earnings period, analysts said.
"The question is how are people going to interpret companies that give lower earnings guidance to pay for their taxes," said Phil Davis of PSW Investments. "It is short-term, but you know investors are not very patient."
In the US, the S&P 500 and Nasdaq edged to fresh records, while the Dow fell for the first time in 2018.
Earlier, Asian equities mostly advanced, with Hong Kong chalking up a blistering tenth day of gains.
The positivity spilled over into Europe with London scaling another record pinnacle at 7,733.39 points, before turning lower amid a UK government reshuffle.
Frankfurt and Paris maintained momentum, with equity markets rising modestly as the weaker euro against the dollar boosted exporters.
Frankfurt sentiment was also bolstered by German Chancellor Angela Merkel opening a fresh round of negotiations with the aim of forming a government after last year's inconclusive general election.
"Equities are off their best levels but maintain a northerly bearing," said Mike van Dulken at Accendo Markets.