Tech Stocks Carry U.S. Indexes to Record Highs

The major assets classes closed mixed on Tuesday. The three major stock indexes hit record highs, led by tech stocks. U.S. Treasury instruments varied as short-term Treasurys fell while longer-term debt instruments rallied. Gold rebounded after the U.S. Dollar retreated.

U.S. Economic News

U.S. home sales grew more than expected in October as hurricane-related disruptions dissipated, but a lingering shortage of houses continued to make homes unaffordable for some first-time buyers.

The National Association of Realtors said on Tuesday that existing home sales rose 2.0 percent to a seasonally adjusted annual rate of 5.48 million units last month. September’s sales pace was revised down to 5.37 million units from the previously reported 5.39 million units. Economists were looking for a 0.7 percent rise to 5.42 million-unit rate in October.

Late Tuesday, Fed Chair Janet Yellen said on Tuesday that the Federal Reserve is “reasonably close” to its goals and should keep gradually raising the U.S. interest rates to avoid the dual pitfalls of letting inflation drift below target for too long, and of driving unemployment down too far.

U.S. Equity Markets

The major U.S. equity indexes rose to record highs on Tuesday, bolstered by a solid rally in the tech sector and strong quarterly results from several major corporations. A 1.9 percent rise in Apple helped drive the Technology Select Sector exchange-traded fund (XLK) 1 percent higher to a 17-year high. The stock also gave the Dow Jones Industrial Average and S&P 500 Index higher. Large-cap tech stocks like Facebook, Amazon, Netflix and Alphabet all closed higher.

Gold

Gold prices recovered slightly from Monday’s sharp sell-off. The move was led by a weaker U.S. Dollar, which retreated on position-squaring and profit-taking ahead of Wednesday’s minutes of the Federal Reserve meeting held in November.

The market was also supported by flight-to-safety buying related to concerns over a political crisis in Germany, Europe’s largest economy.

Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil closed higher on Tuesday on renewed optimism of an extension to OPEC output cuts at next week’s key producers meeting on November 30. However, gains were limited by worries over increasing U.S. production.

The markets also remained supported by geopolitical tensions in the Middle East and a deteriorating macroeconomic picture in Venezuela.