NEW YORK — U.S. stocks closed at a record high on Thursday, capping a three-day rally fueled by solid corporate earnings, a softer reading on wholesale prices and growing confidence among investors that the economy can keep growing without a sharp rebound in inflation.
The broad benchmark index of large U.S. companies rose 1.1 percent to finish above its previous peak set in late summer. The blue-chip average gained 0.9 percent, and the technology-heavy index climbed 1.4 percent. Roughly 4 of every 5 stocks on the New York exchange advanced, a sign that the rally reached well beyond a handful of large companies.
Earnings and inflation data
Investors cheered quarterly reports from several large industrial and technology companies that topped analysts’ forecasts. Halvorsen Industrial, a maker of factory equipment, rose 6 percent after raising its full-year outlook, citing strong orders from utilities and data center builders. Brightline Semiconductor gained 4.5 percent after reporting record revenue.
A government report released before the opening bell showed wholesale prices rose 0.1 percent last month, less than economists expected. The report added to hopes that inflation will continue to drift lower, giving the Federal Reserve room to cut interest rates next year.
The market is betting that we get the soft landing everyone talked about two years ago. The earnings support that view for now, but expectations are getting high.
Andrea Whitfield, chief market strategist, Larkspur Capital
- +1.1 percent: broad benchmark index, to a record close
- +1.4 percent: technology-heavy index
- 4.18 percent: 10-year Treasury yield, down from 4.24 percent
- $79.40: U.S. crude oil, per barrel, down 0.6 percent
Bonds, oil and the dollar
Treasury yields fell after the inflation data, with the yield on the 10-year note slipping to 4.18 percent. Lower yields tend to support stock prices by making bonds a less attractive alternative and reducing borrowing costs for companies. Oil prices eased slightly as traders weighed rising U.S. inventories, and the dollar weakened modestly against a basket of major currencies. Gold rose 0.4 percent.
Not everyone is comfortable with the market’s pace. The benchmark index is up about 19 percent so far this year, and by one common measure, stocks are trading at their highest valuations relative to expected earnings in several years. Some strategists say that leaves little room for disappointment if the economy slows or inflation reaccelerates.
“Records are fun headlines, but they don’t mean the market can’t fall next week,” said Thomas Greer, an investment strategist at Bayside Wealth Partners. He noted that consumer spending has slowed in some categories and that several retailers have issued cautious forecasts for the holiday season.
Others argued that the rally is on firmer ground than previous surges because profits are rising across many industries, not just technology. “Earnings growth is broadening out,” Whitfield said. “That is usually a healthier sign than a market driven by five stocks.”
Financial planners often remind savers that daily market swings matter less for long-term goals than steady contributions and diversification. Many workers saw their retirement account balances reach new highs this quarter, but advisers caution against making big changes based on any single day’s moves.
Investors will turn next to Friday’s report on consumer prices and another round of earnings reports from banks and retailers next week. Strategists said a hotter-than-expected inflation reading could quickly reverse some of the week’s gains, while another soft number would likely strengthen bets on rate cuts early next year. Trading volume was slightly above its recent average, suggesting broad participation in the rally rather than a thin holiday-style session.
