Wall Street records substantial gains on first trading day of 2018
|- Nasdaq and S&P 500 close at new all-time highs.
- Energy and technology lead gains on Tuesday.
- The CBOE Volatility Index drops more than 12%.
After finishing 2017 with their best annual percentage gains since 2013, major equity indexes in the United States started the new year on a high note and recorded decisive gains on the first official trading day of 2018.
Led by sharp increases in tech-giants Apple, Google, Microsoft, Alphabet (Google) and Facebook, the S&P 500 Information Technology Sector (SPLRCT), the best performing sector of 2017, added 1.4% on Tuesday, lifting the tech-heavy Nasdaq Composite to an all-time high. Moreover, the risk-sensitive index received an additional boost from the improved market sentiment. The CBOE Volatility Index, Wall Street's fear gauge, dropped more than 12% on the day, confirming the risk-on mood.
“When you look at the sentiment indicators ... We’re starting to see sentiment really pick up. Our best guess is the first quarter or half of the year can be OK as a continuation of last year,” Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago, told Reuters.
Although the barrel of West Texas Intermediate closed the day with small losses, the S&P 500 Energy Sector (SPNY) rose nearly 1.8% as investors priced the possibility of shale producers in the U.S. ramping up their output to take advantage of rising crude oil prices.
The S&P 500 Financials Sector (SPSY) failed to take advantage of the positive sentiment and closed the day with small losses. However, the Fed is going to release its December meeting minutes on Wednesday, and a hawkish tone could help the index gain traction as it would point to more rate hikes in 2018, which would support the bank shares.
The Dow Jones Industrial Average gained 104.99, points, or 0.42%, to 24,824.21, the S&P 500 added 22.26, or 0.83%, to 2,695.87 and the Nasdaq Composite rose 102.81, or 1.49%, at 7,006.20.
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