U.S. stocks mostly advanced on Monday, continuing the S&P 500 index’s record run above 1,600 after the April jobs report exceeded expectations.
“The market had a pretty good run over the last several years, and here we are at all-time highs,” said Robert Stein, senior managing director of Astor Asset Management in Chicago.
“I’m not sure it’s supportive of all the fundamentals, but we’re moving from a period of uncertainty to a period of — air quotes here — visible risk. So when you have visible risk, it allows for a larger investment, maybe buying things that when you were uncertain you wouldn’t buy at all,” he said.
U.S. equities are in a bull market that in March entered a fifth year as better-than-anticipated corporate results and three rounds of Treasury purchases by the Federal Reserve has the S&P 500 up roughly 140% from March 2009.
“We’ll see if the market can digest the new highs, as it transitions from the defensive to cyclical sectors,” Art Hogan, market strategist at Lazard Capital Markets LLC, said of the rotation that surfaced last week. See: Stock-market rally takes a new turn as tech leads.
The rotation into riskier sectors is a healthy one, assuming it continues, as “it shows investors are taking on a higher level of risk,” Hogan said. “What you had was bond-like investors investing in bond-like stocks, so it was very dividend driven.”
On Monday, the three-year anniversary of the “flash crash” that had the Dow industrials losing almost 1,000 points in less than half an hour, the recently started trend was in play.
“Three years later, and it [the flash crash] didn’t impact anything, the economy continued to grow and the average 401k-IRA guy probably isn’t impacted by it,” said Stein, who advocates investors view the stock market through the lens of a larger perspective rather than day-to-day events and market moves.
Investors have moved from consumer staples and other defensive sectors that outperformed the first four months of the year into the worst performing sectors, namely technology, energy and basic materials.
Financials and technology fared best and utilities and consumer staples led the declines on the S&P 500 index, which added 3.08 points to 1,617.50, surpassing Friday’s record close.
The Dow Jones Industrial Average fell 5.07 points to 14,968.89, with 16 of its 30 components declining.
Dow component Intel Corp. shares edged lower after the chip manufacturer’s McAfee security unit offered to purchase Finland’s Stonesoft Oy for $389 million.
The Nasdaq Composite jumped 14.34 points to 3,392.97.
For every two shares that fell, roughly three acquired on the New York Stock Exchange, where 619 million shares traded. Composite volume topped 3 billion.
The cost of oil bolster, with crude futures up 55 cents at $96.16 a barrel on the New York Mercantile Exchange.
Humana Inc. rose 2.1% after J.P. Morgan upgraded shares of the provider of Medicare coverage to overweight from neutral.
Tyson Foods Inc. slid 3.3% after the meat processor reported second-quarter sales and profit below market expectations.
Shares of Canada’s Barrick Gold Corp. climbed along with the price of gold, with futures for June delivery up $3.80 at $1,468 an ounce.
BMC Software Inc. shares were unchanged after the software maker said it had agreed to be purchased for about $6.9 billion in cash by a private investment group led by Bain Capital LLC and Golden Gate Capital.
Cliff Natural Resources Inc. gained 5.5% after FBR Capital Markets upgraded the iron-ore producer to outperform from market perform.
In Europe, stock trading volumes were slim with the United Kingdom closed for a public holiday.
Stocks finished last week with a blockbuster session, with the Dow industrials ending at a record close of 14,973.96, a gain of 142.38 points, while the Standard & Poor’s 500 index for the first time closed above 1,600. The gains came after the Labor Department reported Friday that the U.S. economy created more jobs than expected in April and the unemployment rate declined.
