U.S. Equity Indexes Rise to Record Highs

U.S. stock indices were mixed on Tuesday after hitting new all-time highs on light, pre-holiday buying. The price action was driven by the direction of crude oil prices and the U.S. Dollar. Additionally, investors digested housing data and the expected impact of president-elect Donald Trump’s policies on the economy.

The Dow Jones Industrial Average broke above 19,000 for the first time in history. The benchmark S&P 500 Index traded over 2,200 for the first time shortly after the opening. The NASDAQ Composite also reached a new all-time high.

At the mid-session, the S&P 500 Index was at 2196.85, down 1.33 or -0.06%. The Dow was trading 18977.68, up 20.99 or +0.11%. The NASDAQ Composite was at 5376.74, up 7.88 or +0.15%

Today’s price action indicates we are moving from an interest rate driven market into an earnings driven market.

In other news, according to the CME Group’s FedWatch tool, market expectations for an interest rate hike in December were 100 percent. The Earnings Scout also reported that S&P 500 earnings grew for the first time in more than a year, coming in at 6.21 percent.

In economic news, existing home sales rose to their highest annual rate since February 2007. The report showed that 5.60 million units were sold, compared to the 5.43 million unit estimate and last month’s revised 5.49 million units.

Crude Oil

Crude oil prices reversed down after rising to their highest level in a month as investors reacted to a possible snag in the negotiations to lower production. Early in the session, WTI and Brent Crude Oil posted solid gains as trader bet that OPEC would continue to move towards reaching an agreement ahead of its November 30 meeting in Vienna.

Prices were supported by comments from a Nigerian official who said that it was likely all countries would be “on board” by the end of the day. However, oil couldn’t hold on to its gains and turned negative after OPEC reported that an agreement to cut output by 4 to 4.5 percent would need the approval of Iran and Iraq.

Gold

December Comex Gold prices traded lower on Tuesday in reaction to stronger equity prices and a firmer U.S. Dollar. Also pressuring the market was another rise in U.S. Treasury yields. The Treasury Department auctioned $34 billion in five-year notes at a high yield of 1.76 percent. This helped increase the spread between U.S. and German bond yields, making the U.S. Dollar a more attractive investment.