Stocks tick up to another record high as Goldilocks reigns

After rocketing higher in the first few months of the year, momentum has moderated for the S&P 500 index in recent weeks. Trading has remained relatively quiet, as reports on the economy and corporate profits come in better than analysts expected and give investors further confidence that the economy can avoid a recession. (Shutterstock photo)

NEW YORK — U.S. stock indexes edged further into record territory Monday following more signs that the economy is growing in the not too hot, not too cold way that investors love.

The S&P 500 index ticked up by 3.15 points, or 0.1%, to 2,943.03. Big gains for banks led the way on hopes for bigger profits from making loans, but losses for high dividend stocks held indexes in check.

The Dow Jones Industrial Average rose 11.06, or less than 0.1%, to 26,554.39, and the Nasdaq composite gained 15.46, or 0.2%, to 8,161.85. Both the S&P 500 and Nasdaq closed at record highs.

After rocketing higher in the first few months of the year, momentum has moderated for the S&P 500 index in recent weeks. Trading has remained relatively quiet, as reports on the economy and corporate profits come in better than analysts expected and give investors further confidence that the economy can avoid a recession.

“I think it’s healthy to see these sideways or even slightly down days,” said Nate Thooft, senior portfolio manager at Manulife Asset Management. “This is just digesting the big move we had earlier in the year.”

The S&P 500 is up 17.4% so far in 2019, and it has more than erased its nearly 20% drop from late last year when worries were high than an overly aggressive Federal Reserve could cause a recession by raising interest rates too quickly.

“We’re kind of in complacency land, Goldilocks land,” Thooft said. “That in itself is a little bit alarming, but I don’t see what changes it either.”

Helping to spur Monday’s gains was a report from the Commerce Department that showed an economy that’s growing, but not at too hot a pace. Consumer spending jumped 0.9% in March, the biggest gain in nearly a decade. But the same report also showed that the Federal Reserve’s preferred measure of price changes remains well below its target.

Low inflation gives the central bank more leeway to hold off on raising interest rates, and it was the Fed’s pledge earlier this year to be patient on rates that sent stocks surging. The Federal Reserve will meet again on interest rates this week, and most investors expect it to make no changes.

More relief is also coming from ongoing negotiations between the U.S. and China as they try to end a costly trade war. Both sides have said they are making progress and are continuing talks this week.

Big U.S. companies also continue to turn in stronger earnings for the first three months of the year than analysts expected. Google’s parent company, Alphabet, joined the lengthening list when it reported its results after trading ended on Monday.

Analysts say companies across the S&P 500 index may end up reporting slightly higher profits for the first quarter than a year ago. Just a few weeks ago, Wall Street was predicting the first drop in earnings in nearly three years.

Nearly a third of the companies in the S&P 500 are scheduled to report their results for the first quarter this upcoming week, including CVS Health, General Motors and McDonald’s.

Treasury yields rose with the encouraging data on consumer spending, and the yield on the 10-year Treasury climbed to 2.52% from 2.50% late Friday.

Higher interest rates can mean bigger profits for banks, and financial stocks in the S&P 500 jumped 0.9%. JPMorgan Chase and Bank of America both rose 1.4%.

On the losing side were utility stocks and real estate investment trusts, which are big dividend payers. When bonds pay more in interest, it can dull the appeal of dividend paying stocks.

Real estate stocks in the S&P 500 dropped 1.1%, and utilities sank 0.6%.

In overseas markets, the Hang Seng rose 1% in Hong Kong, and South Korea’s Kospi jumped 1.7%. The French CAC 40 gained 0.2%, Germany’s Dax inched up by 0.1% and the FTSE 100 in London rose 0.2%. Japanese markets were closed for a weeklong holiday.

Benchmark U.S. crude rose 20 cents to settle at $63.50 per barrel. Brent crude, the international standard, fell 11 cents to $72.04 a barrel.

Natural gas added a penny to $2.59 per 1,000 cubic feet, heating oil was virtually flat at $2.05 per gallon and wholesale gasoline dipped 2 cents to $2.08 per gallon.

Gold fell $7.30 to $1,281.50 per ounce, silver lost 16 cents to $14.93 per ounce and copper was virtually flat at $2.90 per pound.

The dollar rose to 111.71 Japanese yen from 111.61 yen late Friday. The euro rose to $1.1183 from $1.1154, and the British pound ticked up to $1.2935 from $1.2925.