Dow and S&P hit record highs on energy shares surge

The S&P 500 and the Dow hit record highs on Monday, fuelled by energy shares, while the Nasdaq was lower, dragged down by technology stocks, a day ahead of the Federal Reserved’s two-day meeting.

Oil prices gained as much as 6.5 per cent to an 18-month high after the Organization of the Petroleum Exporting Countries (Opec) and some of its rivals reached their first deal since 2001 to jointly reduce output to try to tackle global oversupply and boost prices.

The S&P energy index was the top-performing sector with a 1.7 per cent rise. Oil major Exxon was up 2.54 per cent, providing the biggest boost to the Dow and S&P. Chevron rose 2.2 per cent.

US president-elect Donald Trump’s expected agenda of economic stimulus and reduced taxes and regulations has fuelled a market rally, with the benchmark S&P 500 rising 5.6 per cent since November 8th to Friday’s close.

Oil jumps after Saudi Arabia looks likely to cut output

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The Dow has closed at record highs 14 times since the election.

"The market has been rising on the incoming administration's proposals, but how many of those actually pass through Congress remains to be seen," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

“Investors are expecting the Fed to hike rates but are more interested in the tone of the statement.”

Fed statement

Market participants are keeping a close watch on the US Federal Reserve’s last meeting of the year, beginning on Tuesday, with a statement from Fed chair

Janet Yellen

on Wednesday.

By noon the Dow Jones industrial average was up 32.96 points, or 0.17 per cent, at 19,789.81, the S&P 500 was down 1.68 points, or 0.074352 per cent, at 2,257.85 and the Nasdaq Composite was down 30.87 points, or 0.57 per cent, at 5,413.63.

Six of the 11 major S&P sectors were higher.

The consumer discretionary led the decliners with a 0.82 per cent fall, weighed down by a 1.24 per cent drop in Amazon’s shares. The industrials sector was down 0.58 percent, dragged down by defense stocks.

Lockheed Martin declined 3.9 per cent at $249.22 after Donald Trump tweeted that the company's F-35 programme and costs were "out of control". Other defence stocks, such as General Dynamics, Raytheon and Northrop Grumman, were down between 2.7-4.5 per cent.

Viacom fell 8.5 per cent to a two-month low of $35.35 after Sumner Redstone's privately held National Amusements withdrew its merger proposal for CBS and Viacom, according to a source familiar with the situation. CBS was down 2.7 per cent.

Ophthotech slumped 84.9 per cent to a life-low of $5.85 after Novartis said a combination of its eye drug along with the company's did not produce better outcomes.

Declining issues outnumbered advancers on the NYSE by 1,793 to 1,058. On the Nasdaq, 1,808 issues fell and 887 advanced.

The S&P 500 index showed 59 new 52-week highs and one new low, while the Nasdaq recorded 165 new highs and 16 new lows.

– Reuters