US stocks reverse early losses top continue strong start to year

US stocks reverse early losses top continue strong start to year

The US stock market’s perfect start to the year has rolled on, and the Standard & Poor’s 500 index shook off a bit of weakness to move further into record territory.

Stocks had dipped in early trading, and the S&P 500 appeared to be on pace for its first down day of the year, but accelerating gains for dividend-paying and technology stocks helped offset losses in the health care industry, and the S&P 500 eked out a fifth straight gain.

Other US indexes edged higher or held close to their record levels.

"We’re getting a bit tired hearing ourselves talking about the solid economic backdrop and strong earnings growth, but that is the backdrop," said Jon Adams, senior investment strategist for BMO Global Asset Management.

He is optimistic that stocks can continue to rise from their record levels due to the trends, even though the market is more expensive than it usually is relative to corporate profits.

"Everyone is talking about the synchronised economic growth" around the world, he said, "but it’s something we haven’t seen for 10 years."

The S&P 500 rose 4.56 points, or 0.2%, to 2,747.71. The last time the index led off a year with more consecutive gains was in 2010 when it had six.

The Dow Jones industrial average slipped 12.87, or 0.1%, to 25,283.00, the Nasdaq composite rose 20.83, or 0.3%, to 7,157.39, and the Russell 2000 index of small-cap stocks gained 1.80, or 0.1%, to 1,561.81.

One of the biggest gains in the S&P 500 came from Kohl’s, which jumped after it raised its earnings forecast for the year.

The retailer said sales climbed nearly 7% in November and December from a year earlier, and its new profit forecast easily topped Wall Street’s expectations.

Kohl’s rose 2.54 dollars, or 4.7%, to 56.90 dollars.

High-dividend stocks were also strong, with utilities up 0.9% for the biggest gain of the 11 sectors that make up the S&P 500.

They got help from falling Treasury yields, which make dividends more attractive for investors seeking income.

The yield on the 10-year Treasury dipped to 2.47% from 2.48% late on Friday.

On the losing end for stocks was GoPro, which plunged after it said its revenue fell sharply last quarter.

The company had to slash prices on cameras to drive more sales, and it reported preliminary fourth-quarter revenue that fell far short of Wall Street’s expectations.

The stock lost 96 cents, or 12.8%, to 6.56 dollars, and GoPro said it will cut more than 20% of its workforce.

Earnings are one of the best predictors for long-term performance of stocks, and a deluge of companies is set to begin reporting results for the last three months of 2017.

The pace will pick up later this week, and analysts and investors will be most focused on what CEOs say about their expectations for future earnings.

That is because Wall Street is looking for profits to rise even higher after Washington approved cuts in corporate tax rates last month.

The overhaul of the tax system may help some areas of the market more than others, and investors want to see how much companies will raise their forecasts.

Stocks tend to track the trend of corporate profits more than anything else over the long term.

In overseas trading, South Korea’s Kospi index rose 0.6%, and the Hang Seng in Hong Kong gained 0.3%.

In Europe, France’s Cac 40 rose 0.3%, and Germany’s Dax was up 0.4%. The FTSE 100 in London dropped 0.4%.

The dollar slipped to 113.07 Japanese yen from 113.14 late on Friday. The euro fell to 1.1965 dollars from 1.2050, and the British pound edged down to 1.3564 dollars from 1.3565.

Benchmark US crude rose 29 cents to settle at 61.73 dollars per barrel. Brent crude, the international standard, gained 16 cents to settle at 67.78 dollars per barrel.

Natural gas rose 4 cents to 2.84 dollars per 1,000 cubic feet, heating oil fell 1 cent to 2.05 dollars per gallon, and wholesale petrol added 1 cent to 1.79 dollars per gallon.

Gold fell 1.90 dollars to 1,320.40 dollars per ounce, silver lost 14 cents to 17.14 dollars per ounce, and copper dipped a penny to 3.22 dollars per pound.

AP

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