The Dow Jones Industrial Average climbed to a fresh record Wednesday, boosted by shares of manufacturing and financial firms.
Stocks have gotten a lift this week after the U.S. and Canada reached a compromise on trade policy, leading some investors to anticipate further trade deals ahead with China. Despite worries that tariffs could slow the global economy, steady U.S. growth and earnings figures have boosted stock indexes throughout the year.
A number of Federal Reserve officials also have delivered upbeat comments about the U.S. economy this week, reinforcing the view that inflation remains steady but not so strong that the central bank needs to hasten its pace of interest-rate increases. Some investors expect that backdrop to continue lifting stocks in the fourth quarter.
“As long as you don’t see clear evidence of the U.S. economy getting weaker, this momentum can continue,” said Luca Paolini, chief strategist at Pictet Asset Management.
The Dow industrials added 54 points, or 0.2%, to 26828 in a fifth consecutive session of gains. The S&P 500 climbed less than 0.1%. The tech-heavy Nasdaq Composite closed up 0.3% and, like the S&P 500, remains slightly below a recent record.
The yield on the benchmark 10-year U.S. Treasury note rose to 3.159%—its highest level since 2011—from 3.056%. Bond yields rise as prices fall. Rising Treasury yields lifted shares of banks, as higher long-term yields tend to boost lending profitability. The S&P 500 financials sector added 0.8%.
Manufacturers also benefited from optimism about trade and domestic economic growth, with the S&P 500 industrials sector rising for a third straight session.
Gains in those areas and in technology stocks neutralized losses in high-dividend-paying sectors that look less attractive when Treasury yields rise. The utilities, real-estate and consumer-staples groups each fell about 1%.
Analysts were awaiting Friday’s jobs report for the latest update on U.S. hiring and wage growth.
Wednesday data showed the U.S. private sector added 230,000 jobs in September, more than economists expected, with midsize businesses and the service sector continuing to dominate those gains.
Additionally, investors were debating whether Amazon.com ’s recent decision to increase its minimum wage to $15 an hour next month could cause labor-cost pressure at other companies. Still, many analysts say rises in price pressures should remain gradual moving forward, barring an unexpected trade setback or spike in oil prices.
An Auto Zone in Canton, Miss., advertises for help on Sept. 27. Analysts are looking ahead to Friday’s jobs report for the latest update on U.S. hiring and wage growth. Photo: Rogelio V. Solis/Associated Press
Meanwhile, the WSJ Dollar Index, which tracks the dollar against a basket of 16 other currencies, rose 0.4%, posting a sixth consecutive session of gains.
Although worries about tighter financial conditions have eased lately, some analysts remain worried about political tensions in Europe and stagnant growth outside the U.S., leading investors to favor assets considered safer such as the dollar.
But Wednesday’s news that the Italian government was considering a lower deficit target after next year assuaged some fears that conflict between Italy and the European Union could stoke broader instability, analysts said.
The Stoxx Europe 600 added 0.5%, and Italian stocks and bonds rebounded.
The question now is whether the European Union will be satisfied by what Italy says on its planned deficits, said Mohammed Kazmi, a portfolio manager at Geneva-based bank Union Bancaire Privée.
“Volatility will remain high until we get the European Commission’s decision, and the rating agency decisions [on Italy] that’ll come later in October,” he said.
Elsewhere, Japan’s Nikkei Stock Average closed down 0.7% from a nearly three-decade high, while Hong Kong’s Hang Seng inched down 0.1%.
Write to Amrith Ramkumar at [email protected]