Dow and S&P 500 surge to record highs, transportation and healthcare sectors soar

The Dow and S&P 500 surged to record highs on Monday, fueled by strong performance in the transportation and healthcare sectors and increased investor optimism.

The Dow Jones industrial average was up by 0.23 percent (39.81 points) to 17,613.74, after five days of advances. The S&P 500 increased by 0.31 percent (6.34 points) to 2,038.26, a fourth day of gains.

The Nasdaq Composite gained 19.08 points to 4,651.62.

The Dow Jones Transportation Average added 1.3 percent to a new high, and 8 of the 10 main S&P 500 groups advanced.

It is now somewhat evident that investors have strong faith in the US economy, believing it is strong enough to handle a general global economic slowdown.

The S&P 500 rebounded 9.4 percent from the six-month low it dropped to in mid October. The reason behind this is that corporate results have been much better than forecast and that US economic data reveals that the economy has the strength to cope with the effects of a global slowdown and the end of the Fed’s bond buying program.

According to data compiled by Bloomberg, 80 percent of companies that recently posted results beat estimates for profit and 60 percent were ahead of sales estimates.

Among the top gainers on the S&P 500 were Union Pacific, which rose by 1.8 percent to $120.90 and JetBlue, which surged by 4.2 percent to $13.09.

John Kosar, director of research with Asbury Research in Chicago, told Reuters:

“We’re making new highs, volatility is low and that suggests investors are complacent enough to buy stocks at those highs. Interest rates are still low, oil prices are low and everything looks conducive to more strength between now and the end of the year,”

Mark Kepner, an equity trader at Chatham, New Jersey-based Themis Trading LLC, told Bloomberg:

“The numbers in the third quarter showed a steady economy, we continue to have oil below $80, consumers feeling confident, low interest rates, and that’s a combination that works well for stocks,”
Adding:

“Central banks have also been quite accommodative in what they’ve been saying and it seems to be working.”