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Higher gasoline, rental costs boost U.S. consumer inflation

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. consumer prices rose in December as households paid more for gasoline and rental accommodation, leading to the largest year-on-year increase in 2-1/2 years and signaling that inflation pressures could be building.

The Labor Department said on Wednesday its Consumer Price Index rose 0.3 percent last month after gaining 0.2 percent in November. In the 12 months through December, the CPI increased 2.1 percent, the biggest year-on-year gain since June 2014. The CPI rose 1.7 percent in the year to November.

The increases were in line with economists’ expectations. The CPI rose 2.1 percent in 2016, up from a gain of 0.7 percent in 2015.

U.S. Treasury prices fell and the dollar strengthened against the euro and yen after the data. U.S. stock index futures were trading higher.

Rising inflation comes against the backdrop of a strengthening economy and tightening labor market, which raises the specter of a faster pace of interest rate increases from the Federal Reserve than currently anticipated.

The U.S. central bank has forecast three rate hikes this year. It raised its benchmark overnight interest rate by 25 basis points to a range of 0.50 percent to 0.75 percent last month.

Price pressures are likely to remain on an upward trend amid expectations of fiscal stimulus from the incoming Trump administration. Republican businessman-turned-politician Donald Trump, who will be sworn in as U.S. president on Friday, has pledged to increase spending on infrastructure and cut taxes.

The so-called core CPI, which strips out food and energy costs, rose 0.2 percent last month after the same increase in November. As a result, the core CPI increased 2.2 percent in the 12 months through December, from 2.1 percent in November.

The Fed has a 2 percent inflation target and tracks an inflation measure which is currently at 1.6 percent.

Last month, gasoline prices jumped 3.0 percent after climbing 2.7 percent in November. Food prices were unchanged for a sixth straight month. The cost of food consumed at home dropped for an eighth consecutive month.

Within the core CPI basket, housing continued its upward march in December. Rents increased 0.3 percent last month, with owners’ equivalent rent of primary residence also rising 0.3 percent. Rents increased 4.0 percent in 2016.

The cost of medical care rose 0.2 percent last month, with the prices for doctor visits unchanged. Prices for prescription medicine increased 0.2 percent. The cost of hospital services rose 0.3 percent.

There were price increases for a range of other goods and services last month including motor vehicle insurance, which increased 0.8 percent. The cost of airline fares rose 1.9 percent in December after falling 1.3 percent in November.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

Trade tensions, dollar danger cloud economic optimism in Davos

By Noah Barkin

DAVOS, Switzerland (Reuters) – A trade war between the United States and China and a strengthening dollar are among the biggest threats to a brightening global economic outlook, according to leading economists at the World Economic Forum in Davos.

As political leaders, businessmen and bankers converge on the resort in the Swiss Alps this week, they can draw hope from a more benign economic picture and a rally in global stock markets on expectations of major stimulus under a new U.S. administration led by Donald Trump.

The backdrop is brighter than it was a year ago, when concerns about a rapid economic slowdown in China led to what Credit Suisse CEO Tidjane Thiam described at the time as “the worst start to any year on record in financial markets ever”.

“I am more optimistic than last year. If no major political or geopolitical uncertainties materialize and derail the world economy, it might even surprise to the upside in 2017,” Axel Weber, the chairman of Swiss bank UBS <UBSG.S> and a former president of the German Bundesbank, told Reuters.

Still, there are big storm clouds on the horizon.

“It is too early to give the all clear,” Weber continued. “This cyclical upswing hides but does not solve the world’s underlying structural problems, which are excessive debt, over-reliance on monetary policy, and adverse demographic developments.”

Among the biggest concerns for 2017 cited by the half dozen economists interviewed by Reuters was the threat of a U.S.-China trade war, and broader economic tensions, triggered by what they fear could be a more confrontational Trump administration.

Trump is threatening to brand China a currency manipulator and impose heavy tariffs on imports of Chinese goods. Last month he named leading China critic Peter Navarro, author of the book “Death by China”, as a top trade adviser.

“This is the key uncertainty because you don’t know how much the rhetoric is a ploy to get better deals,” said Raghuram Rajan, an economist at the University of Chicago who stepped down as governor of India’s central bank last September.

“I’m worried about the people he is surrounding himself with. If they have a more protectionist world view and believe the reason the U.S. is not doing well is because others are cheating that creates a certain kind of rhetoric that could end up very badly for the world.”

CURRENCY RISKS

Last month, the U.S. Federal Reserve hiked interest rates for just the second time in a decade, a sign that the lengthy period of ultra-loose monetary policy that followed the global financial crisis may be coming to an end.

The World Bank said last week that it expects global growth to accelerate to 2.7 percent this year, up from a post-crisis low of 2.3 percent in 2016, on the back of a pickup in U.S. growth and a recovery in emerging markets fueled by a rise in commodity prices.

A year ago in Davos, both Rajan and Weber warned about the limits of loose monetary policy. But now that the Fed is in tightening mode, a new set of risks has emerged.

One is a further strengthening of the dollar, which is already hovering near 14-year highs against the euro.

A further appreciation could widen the U.S. trade deficit, increasing pressure on Trump to resort to protectionist policies. It could also expose weaknesses in the balance sheets of borrowers outside the United States who have borrowed in dollars but hold domestic currency assets.

In Europe, by contrast, a stronger dollar could add fuel to a solid if unspectacular economic recovery, allowing the European Central Bank to plot an end to its own easy money policies including the bond-buying, or quantitative easing (QE), program it recently extended through to the end of 2017.

While welcome, this would also come with risks, particularly for the peripheral euro zone countries that have come to depend on QE to keep a lid on their borrowing costs.

“Just when you think the euro zone is stable it might turn out not to be,” said Kenneth Rogoff of Harvard University, a former chief economist at the International Monetary Fund (IMF).

“If U.S. interest rates continue to rise and the dollar appreciates against the euro it’s going to start getting very hard for (ECB President) Mario Draghi to tell the story that he’s doing QE to prop up inflation. If he ever slows down on QE, the vulnerabilities of the periphery countries are huge.”

EUROPEAN BANKS

Rajan and Richard Baldwin of the Graduate Institute in Geneva said they viewed European banks as another big risk for the global outlook. Italy agreed last month to inject about 6.6 billion euros into Monte dei Paschi di Siena <BMPS.MI>, but the weakness of other Italian banks and German institutions, including Deutsche Bank <DBKGn.DE>, remain a concern.

However the biggest threat may be political. Were French far-right leader Marine Le Pen, who favors a Brexit-style referendum on France’s EU membership, to deliver a Trump-like surprise in the two-round French election in April and May, doubts about the future of the EU and euro zone will increase.

The chances of that seem slim for now. A poll last week suggested conservative candidate Francois Fillon would beat Le Pen in a runoff by a 63 to 37 percent margin. But after two seismic political shocks in 2016 – Trump and Brexit – no one is counting her out.

“Political surprises may fundamentally alter the currently favorable economic and financial outlook for 2017,” said Weber.

(Reporting by Noah Barkin; Editing by Pravin Char)

Weekly jobless claims rise; import prices push higher

Job applicants listen to presentation for job opening at job fair

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing for unemployment benefits rose less than expected last week, pointing to a tightening labor market that is starting to spur faster wage growth.

Other data on Thursday showed import prices posting their largest gain in nearly five years in the 12 months through December, suggesting that inflation could soon push higher. Import prices are being driven by rising oil prices, but a strong dollar could limit some of the impact on inflation.

Initial claims for state unemployment benefits increased 10,000 to a seasonally adjusted 247,000 for the week ended Jan. 7, the Labor Department said. It was the 97th straight week that jobless claims remained below 300,000, a threshold associated with a healthy labor market. That is the longest stretch since 1970, when the labor market was much smaller.

“Jobless claims remain in a very constructive range and are still evidence of an environment in which turnover is low and employers are generally content to maintain and expand their payrolls,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors in Kalamazoo, Michigan.

Economists had forecast first-time applications for jobless benefits rising to 255,000 in the latest week.

Jobless claims data tends to be volatile around the holiday season. The four-week moving average, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 1,750 to 256,500 last week.

The number of Americans still receiving jobless benefits after an initial week of aid fell 29,000 to 2.09 million in the week ended Dec. 31. That was the first decline in the so-called continuing claims since November.

U.S. financial markets were little moved by the data amid disappointment over the lack of details regarding president-elect Donald Trump’s economic policy on Wednesday during his first press conference since his Nov. 8 election victory.

Stocks on Wall Street were trading lower, while prices for U.S. government debt rose. The dollar fell against a basket of currencies also as minutes from the European Central Bank’s last meeting revealed a few policymakers had not backed an extension of the ECB’s bond buying program.

During his election campaign Trump pledged to cut taxes, increase spending on infrastructure and relax regulations. While he has offered few details on these election promises, economists are hoping that the proposed fiscal stimulus would boost economic growth this year.

The stimulus would come against the backdrop of a labor market that is at or near full employment, with the unemployment rate near a nine-year low of 4.7 percent.

With tightening labor market conditions starting to push up wage growth, that could stoke inflation pressures and prompt the Federal Reserve to raise interest rates at a faster pace than currently envisaged.

The Fed raised its benchmark overnight interest rate last month by 25 basis points to a range of 0.50 percent to 0.75 percent. The U.S. central bank has forecast three rate hikes for this year. Average hourly earnings increased 2.9 percent in the 12 months through December, the largest gain since June 2009.

In a second report, the Labor Department said import prices increased 0.4 percent last month as the cost of petroleum products surged 7.9 percent. Import prices slipped 0.2 percent in November.

In the 12 months through December, import prices jumped 1.8 percent, the largest gain since March 2012, after edging up 0.1 percent in the 12 months through November.

Import prices are rising as the drag from lower oil prices fades. Oil prices have risen above $50 per barrel.

Import prices excluding petroleum, however, fell 0.2 percent in December after being unchanged the prior month. This decline in underlying import prices likely reflects sustained dollar strength. Prices of imported automobiles, consumer and capital goods fell last month.

The dollar rose 4.4 percent against the currencies of the United States’ main trading partners last year, with most of the gains coming in the wake of Trump’s victory.

“While the drag on import price inflation stemming from energy is fading, dollar headwinds have resurfaced,” said Sarah House an economist at Wells Fargo Securities in Charlotte, North Carolina.

“We expect the renewed strength in the dollar to remain a challenge for import price reflation in the coming months, but the rebound in energy prices should more than offset any drag.”

(Reporting by Lucia Mutikani; Editing by Andrea Ricci and Chizu Nomiyama)

Global stocks and dollar firmer as Trump news conference approaches

By Vikram Subhedar

LONDON (Reuters) – World stocks and the dollar rose before a news conference by U.S. President-elect Donald Trump in which he is expected to give more details about his plans for the U.S. economy.

Trump’s campaign calls for tax cuts and more infrastructure spending have boosted U.S. shares and the dollar, but his protectionist statements and a flurry of off-the-cuff Tweets have kept many investors from adding to risky positions.

The UK’s FTSE 100 was poised for a record twelfth straight day of gains while European shares rose 0.2 percent.

Stock futures on Wall Street were 0.1 percent firmer though the post-U.S. election rally is showing signs of running out of steam.

Trump has vowed to label China a currency manipulator on his first day in office on Jan. 20 and has threatened to slap huge tariffs on imports from China.

U.S. House of Representatives Speaker Paul Ryan and top members of Trump’s transition team are discussing a controversial plan to tax imports.

Economists have warned that protectionist measures could stifle international trade and hurt global growth.

That brings Trump’s press conference, scheduled for 11:00 EST, into sharp focus.

“From a currency perspective, markets will aim to get a clearer picture on trade, fiscal stimulus and the new administration’s relationship to the Fed,” Morgan Stanley strategists wrote in a note to clients.

The dollar inched higher against the yen on Wednesday but was 0.4 percent firmer against the basket of currencies used to measure its broader strength.

The dollar has gained broadly since Trump’s election in November as investors bet he would boost public spending and spur repatriation of overseas funds by U.S. companies as well as higher inflation and interest rates.

But more doubts have emerged in recent weeks about that narrative, and investors will have a close eye on what the new president says about trade and relations with China.

Bank of America-Merrill Lynch strategists warned on Wednesday that a worrying consensus has developed in financial markets with analysts and investors overwhelmingly bearish on bonds and positive on developed market stocks, financials and the U.S. dollar.

Sterling meanwhile edged towards a 10-week low against the dollar on Wednesday, kept under pressure by fears that Britain will undergo a “hard” exit from the EU in which access to the single market will play second fiddle to immigration controls.

The Turkish lira fell to new lows despite efforts by the country’s central bank to support it with pressures piling on the economy.

An auction of German debt was expected to go down well with investors looking for safe havens. Portuguese yields held near 11-month highs as the country prepared for its toughest bond sale in years.

In commodity markets, oil rose, lifted by reports of Saudi supply cuts to Asia, but gains were capped by a lack of detail about the reductions and because of signs of rising supplies from other producers.

Prices for Brent futures LCOc1, the international benchmark for oil prices, were trading at $53.94 per barrel at 1200 GMT, up 30 cents from their previous close.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $51.11 a barrel, up 29 cents.

(Editing by Hugh Lawson and Toby Chopra)

Dollar falls against yen on risk reduction; sterling sinks

By Sam Forgione

NEW YORK (Reuters) – The U.S. dollar slumped against the safe-haven yen on Monday on investors’ reduced appetite for risk, while sterling sank to more than two-month lows on talk that Britain would drastically rework trade ties with the European Union after Brexit.

A fall in U.S. Treasury yields and U.S. stocks drove the dollar down as much as 0.6 percent against the yen to a session low of 116.16 yen JPY=. The dollar remained within recent trading ranges and did not test Friday’s more than three-week low of 115.04 yen.

Analysts said there was no fundamental catalyst for the dollar’s decline against the yen, with traders probably reacting to lower U.S. yields and equities.

“There’s an optical relationship with the fact that stocks are lower,” said Shahab Jalinoos, global head of FX strategy at Credit Suisse in New York.

The dollar was last down 0.4 percent at 116.43 yen. It dipped modestly against the euro and Swiss franc, leading the dollar index .DXY, which measures the greenback against a basket of six major currencies, to stand 0.08 percent lower at 102.150.

The pound slid more than 1 percent against both the dollar GBP=D4 and the euro EURGBP=R after weekend comments from British Prime Minister Theresa May that she was not interested in keeping “bits of membership” of the European Union.

Sterling slid as low as $1.2125, its weakest against the dollar since the end of October. It fell about 1.2 percent against the euro, hitting 86.91 pence per euro, the lowest since mid-November.

“Anything that suggests a hard Brexit is more likely … is very damaging to UK growth prospects,” said Richard Franulovich, a senior currency strategist at Westpac Banking Corp in New York.

Against the dollar, sterling was last down 1 percent at $1.2156, while the euro EUR= was up 0.3 percent at 1.0562. The dollar was down 0.17 percent against the franc at 1.0162 francs CHF=.

On Wall Street, the benchmark S&P 500 stock index .SPX was down 0.13 percent, while benchmark 10-year U.S. Treasury yields US10YT=RR fell nearly four basis points on the day to 2.383 percent.

(Reporting by Sam Forgione; Additional reporting by Marc Jones in London; Editing by Lisa Von Ahn))

Banks, oil stocks weigh on Wall St., keep Dow from 20,000

By Yashaswini Swamynathan

(Reuters) – The Dow Jones Industrial Average declined on Monday, retreating from the historic 20,000 mark, weighed down by banks and energy companies, while a gain in technology stocks kept the Nasdaq afloat.

Of its 30 components, 20 of the Dow’s stocks were trading lower, led by Goldman Sachs’s <GS.N> 1.4 percent decline. P&G <PG.N> fell 0.9 percent and Coca-Cola <KO.N> dropped 0.5 percent after Goldman downgraded both the consumer staple stocks.

Eight of the 11 major S&P sectors were lower, led by the energy sector’s <.SPNY> 1.3 percent drop. Oil prices fell 2.3 percent as signs of growing U.S. output outweighed optimism that other producers were sticking to a deal to cut supply to bolster prices. [O/R]

The decline meant the Dow moved further away from the 20,000-point mark. It came tantalizingly close on Friday, hitting a record of 19,999.63 as the S&P 500 and the Nasdaq also touched records after a late pop in technology stocks.

The sector again helped the market on Monday.

At 9:41 a.m. ET the Dow <.DJI> was down 57 points, or 0.29 percent, at 19,906.8.

The S&P 500 <.SPX> was down 4.91 points, or 0.22 percent, at 2,272.07.

The Nasdaq Composite <.IXIC> was up 7.83 points, or 0.14 percent, at 5,528.89.

“The market is building drama around 20,000 and if and when we get promising earnings reports, the Dow will go through the point like a hot knife through butter,” said Andre Bakhos, managing director at Janlyn Capital in Bernardsville, New Jersey.

Wall Street’s rally since Donald Trump won the U.S. election in November, with investors betting he will introduce business-friendly policies, has led to lofty valuations.

The S&P is trading at about 17 times expected earnings, compared to its 10-year average of 14. That could make investors cautious as they gear up for the fourth-quarter earnings season.

The first peek into how companies fared last quarter will be provided later this week by big U.S. banks. S&P 500 companies overall are expected to post a 6.1 percent increase in profit in the quarter, according to Thomson Reuters I/B/E/S.

Among stocks, Dow component UnitedHealth <UNH.N> lost 0.6 percent to $161.42 after the insurer’s Optum unit said it would buy Surgical Care Affiliates Inc <SCAI.O> for about $2.30 billion. Surgical Care’s stock was up 15 percent.

VCA Inc <WOOF.O>, which runs hospitals for animals, soared 28 percent to $90.78 after Mars Inc said it would buy the company for $7.7 billion.

Acuity Brands <AYI.N> was the biggest percentage loser on the S&P, falling 16 percent to $199.16 after the lighting solutions provider reported first quarter sales that missed analysts’ expectations.

Declining issues outnumbered advancers on the NYSE by 1,741 to 915. On the Nasdaq, 1,469 issues fell and 942 advanced.

The S&P 500 index showed three new 52-week highs and no new lows, while the Nasdaq recorded 27 new highs and seven new lows.

(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Savio D’Souza)

U.S. short-term bond yields, dollar gain on Fed rate hike

A trader works on the floor of the New York Stock Exchange (NYSE) as a television screen displays coverage of U.S. Federal Reserve Chairman Janet Yellen shortly after the announcement that the U.S. Federal Reserve will hike interest rates, in New York, U.S.,

By Caroline Valetkevitch

NEW YORK (Reuters) – Yields on shorter-dated Treasuries hit their highest in more than five years on Wednesday while the dollar rallied after the U.S. Federal Reserve raised interest rates as expected and signaled a faster pace of hikes in 2017.

U.S. stocks fell in choppy action, but were off their lows, following the statement from the Fed, which raised the target federal funds rate 25 basis points to between 0.50 percent and 0.75 percent.

Central bank policymakers also shifted their outlook to one of slightly faster growth, with President-elect Donald Trump planning a simultaneous round of tax cuts and increased spending on infrastructure.

“It was largely as expected, but it’s pretty clear the market is taking it as a bit more aggressive or hawkish than it had thought,” said Ed Keon, portfolio manager and managing director at QMA, the multi-asset manager wholly-owned by Prudential Financial in Newark.

Yields on two-year Treasury notes rose to their highest since August 2009, while three-year yields hit their highest since May 2010 and five-year yields rose to their highest since May 2011.

U.S. two-year notes fell 4/32 in price to yield 1.247 percent.

The dollar index, which measures the greenback against a basket of six major currencies, was last up 1 percent at 102.11. The index had been trading lower while bond yields were also mostly lower before the Fed statement.

In the U.S. stock market, the Dow Jones industrial average fell 41.96 points, or 0.21 percent, to 19,869.25, the S&P 500 lost 7.7 points, or 0.33895 percent, to 2,264.02 and the Nasdaq Composite dropped 0.33 points, or 0.01 percent, to 5,463.49.

MSCI’s all-country world stock index was down 1.1 percent, adding to earlier losses. The pan-European STOXX 600 share index ended down 0.5 percent.

Gold turned lower and tapped the lowest in more than 10 months following the Fed statement, while oil prices fell as the dollar gained.

Spot gold was down 0.3 percent at $1,154.62 an ounce.

Brent crude futures settled at $53.90 per barrel, down $1.82, or 3.27 percent. U.S. crude ended the session down $1.94, or 3.66 percent at $51.04 per barrel.

(Editing by Robin Pomeroy and Nick Zieminski)

Dow set to open at record high; oil hits $55

Traders on the floor of the New York Stock Exchange

By Yashaswini Swamynathan

(Reuters) – The Dow was poised to open at an all-time high on Monday, as oil prices topped $55 a barrel for the first time in 16 months, and investors shrugged off the defeat of a referendum in Italy for constitutional reforms.

Futures lost ground slightly on Sunday after Italian Prime Minister Matteo Renzi said he would resign following the rejection.

However, world stocks, including Italian shares, reversed course to trade higher on Monday as investors bet against immediate snap elections in the country.

Brent crude prices were up 0.8 percent, after touching a high of $55.33, taking the total gains to 19 percent since Wednesday, when OPEC and other producers struck a deal to limit output to prop up prices. [O/R]

The Dow will open at a record intraday high, its eighth since Nov. 10, if active trading follows movement in futures. The index has marked four straight weeks of gains, benefiting from investors’ rotation into sectors such as financials, which are likely to gain from President-elect Donald Trump’s policies.

“You’ve got a very split tape with some sectors working well, like the financials and transports, while the rest of the market is not working well,” said Adam Sarhan, chief executive at Orlando, Florida-based 50 Park Investments.

However, Wall Street closed little changed on Friday as investors booked profits off bank stocks, despite a strong payrolls report that strengthened the prospects of an interest rate hike next week.

Dow e-minis <1YMc1> were up 73 points, or 0.38 percent, at 8:28 a.m. ET (130 GMT), with 57,797 contracts changing hands on Monday.

S&P 500 e-minis <ESc1> were up 6.5 points, or 0.3 percent, with 249,606 contracts traded.

Nasdaq 100 e-minis <NQc1> were up 17.5 points, or 0.37 percent, on volume of 39,369 contracts.

An Institute of Supply Management report is likely to show activity in the U.S. services sector rose slightly in November from the previous month. The report is due at 10:00 a.m. ET (1500 GMT)

New York Federal Reserve President and permanent voting member William Dudley said Trump’s election had created “considerable” uncertainty on the policies he would pursue so it was too soon for the Fed to judge whether its plan for gradual interest rate hikes needs adjusting.

Shares of Energy Transfer <ETP.N> dropped 6.9 percent to $32 after the U.S. Army Corps of Engineers turned down a permit for the company’s controversial pipeline project running through North Dakota.

FairPoint <FRP.O> shares jumped 14.4 percent after Consolidated Communications <CNSL.O> said it would buy the broadband service provider in an all-stock deal valued at $1.5 billion, including debt.

Chesapeake Energy <CHK.N> rose 4.2 percent to $7.53 after the U.S. natural gas producer said it would sell a part of its acreage in the Haynesville Shale area for $450 million to a private company.

(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Sriraj Kalluvila)

S&P 500, Dow hit record highs on Black Friday

Traders work on the floor of the New York Stock Exchange (NYSE)

(Reuters) – The S&P 500 and the Dow opened at record intraday highs on Friday, helped by gains in healthcare and consumer staple stocks at the start of the crucial holiday shopping season.

The Dow Jones Industrial Average was up 47.01 points, or 0.25 percent, at 19,130.19. It hit a record of 19,138.51.

The S&P 500 was up 3.15 points, or 0.14 percent, at 2,207.87. It hit a record of 2,208.74.

The Nasdaq Composite was up 3.97 points, or 0.07 percent, at 5,384.64.

(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Savio D’Souza)

Wall St. at record highs, Dow tops 19,000 for first time

raders work on the floor of the New York Stock Exchange (NYSE) in New York City, NY,

By Yashaswini Swamynathan

(Reuters) – The three main U.S. stock indexes hit records highs for the second straight day on Tuesday, with the Dow topping 19,000 points and the S&P 500 moving past 2,200 points for the first time ever as the Donald Trump-fueled rally continued.

The small cap Russell 2000. RUT index hit an intraday high for the fourth day in a row. The index, along with the Dow, Nasdaq and S&P, closed at record highs on Monday, the first such instance since December 1999.

Trump’s pro-growth policies, including promises of tax cuts, higher spending on infrastructure and simpler regulations in the banking and healthcare industries, have led a rally, especially in those sectors, since the election on Nov. 8.

The consumer discretionary sector’s 0.74 percent increase on Tuesday led the gainers among the 11 major S&P sectors, boosted by strong quarterly reports from Dollar Tree and Signet Jewelers.

The healthcare sector was the only laggard, dropping 0.74 percent, weighed down by Medtronic.

The Dow took 121 days, or about five months, to move to 18,000 points from 17,000 points, but has since crawled along. The index took another 483 days, or roughly two years to breach 19,000 points.

“In itself the numbers don’t mean much, but from a psychological or milestone standpoint it’s a good achievement for the market,” Adam Sarhan, chief executive of 50 Park Investments, said of the record-high levels of the indexes.

“Strength begets strength. The more we can continue to rally, the more people who are on the sidelines want to jump in especially because there’s so much cash on the sidelines. The market going up is the single best advertisement for the market.”

At 10:07 a.m. ET the Dow Jones Industrial Average was up 45.47 points, or 0.24 percent, at 19,002.16, easing after hitting an all-time high of 19,014.73.

The S&P 500 SPX was up 4.2 points, or 0.19 percent, at 2,202.38. It hit a high of 2,203.56.

The Nasdaq Composite was up 19.69 points, or 0.37 percent, at 5,388.55, after touching a high of 5,392.26.

Dollar Tree surged 9.5 percent to $89.91 after the biggest U.S. dollar-store chain reported a better-than-expected quarterly profit.

Signet was up 7.5 percent at $95.49 after the jeweler reported a much better-than-expected quarterly profit and raised its profit forecast.

Medtronic tumbled 7.5 percent to $74.5 after the medical device maker reported quarterly revenue that missed expectations and cut its full-year adjusted earnings forecast.

Advancing issues outnumbered decliners on the NYSE by 2,019 to 740. On the Nasdaq, 1,554 issues rose and 930 fell.

The S&P 500 index showed 44 new 52-week highs and four new lows, while the Nasdaq recorded 160 new highs and eight new lows.

(Reporting by Yashaswini Swamynathan and Tanya Agrawal in Bengaluru; Editing by Anil D’Silva and Savio D’Souza)

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