Dow, S&P hit record highs on Black Friday as Trump rally continues

Feb 2014
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U.S. equities traded higher on Friday, tracking for weekly gains, as investors kept an eye on retailers during Black Friday as a post-election rally moved forward.

"The Trump honeymoon continues. The focus now shifts to Black Friday and holiday sales," said Peter Cardillo, chief market economist at First Standard Financial. However, he said "whatever happens today will be on light volume" because several investors and traders were out celebrating the Thanksgiving holiday in the U.S.

The Dow Jones industrial average rose about 50 points, hitting a new record high, as 3M contributed the most gains. The S&P 500 also shot to a new record, trading 0.19 percent higher as utilities gained 1.2 percent to lead advancers. The Nasdaq composite rose 0.1 percent. The three major indexes were also up more than 1 percent for the week.
The Russell 2000, which is made up of small-cap stocks, traded slightly higher to hit a new record level, and was on pace to post a 2 percent weekly gain.
Several retailers kicked off Black Friday sales on Thursday. J.C. Penney opened its doors Thursday at 3 p.m., while Macy's began sales at 5 p.m. Thursday. Retail giant Wal-Mart, meanwhile, began offering Cyber Monday deals on Friday, coming off the announcement that it would significantly increase its online inventory.
The major U.S. stock indexes have been on a tear lately, ripping to new record highs on optimism that President-elect Donald Trump's proposed policies would stimulate economic growth.
"From a technical perspective, it seems like we're going higher, ... but we're bound to hit a road block," said First Standard's Cardillo, who noted that, while the market has priced in a December Federal Reserve rate hike, it may not have priced in more aggressive tightening by the central bank. According to the CME Group's FedWatch tool, market expectations for a rate hike next month are more than 90 percent.
U.S. Treasury yields and the dollar have also risen sharply since the election, with the benchmark 10-year note yield skyrocketing above 2 percent and the greenback trading around levels not seen since 2003, putting euro/dollar parity within reach. Gold prices, in turn, have turned sharply lower, hitting nine-and-a-half month lows.
"The heightened fears over diminishing Eurozone growth coupled with ongoing political instability in Europe have left the Euro extremely vulnerable to losses. Sentiment remains firmly bearish towards the EUR with steeper declines expected as speculators bet over the European Central Bank extending its QE program at December's policy meeting," Lukman Otunuga, research analyst at FXTM, said in a note.
On Friday, the 10-year note yielded 2.368 percent, while the dollar fell 0.3 percent against a basket of currencies.
On the data front, U.S. trade deficit totaled $62 billion in October. The November read on the IHS Markit non-manufacturing index came in at 54.7, marginally lower than the October read of 54.8.
"Service sector activity was supported by the fastest rise in incoming new orders for 12 months, alongside greater efforts to reduce work-in-hand. The fall in backlogs of work was the first since June, and partly reflected a sustained upturn in staff hiring," IHS Markit said.
In oil markets, U.S. crude futures for January delivery fell 1.6 percent to $47.20 per barrel as uncertainty about whether OPEC can agree on a production cut weighed on prices.
Overseas, European equities traded mostly flat, with the Stoxx Europe 600 index holding around breakeven. In Asia, stocks closed mostly higher, with the Nikkei 225 gaining 0.26 percent and the Shanghai composite advancing 0.62 percent.
The Dow Jones industrial average gained 50 points, or 0.27 percent, to 19,1343, with Coca-Cola leading advancers and Caterpillar the biggest decliner.
The S&P 500 rose 5 points, or 0.23 percent, to 2,209, with utilities leading nine sectors higher and energy and financials the only laggards.
The Nasdaq advanced 4 points, or 0.08 percent, to 5,385.
About eight stocks advanced for every five decliners at the New York Stock Exchange, with an exchange volume of 124 million and a composite volume of 502 billion in midmorning trade.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded higher, near 12.6.
Gold futures for December delivery fell $5 to $1,184.30 per ounce.
Dow, S&P hit record highs on Black Friday as Trump rally continues