American equities jumped Friday, with the Dow Jones Industrial Average crossing the 18,000-level for the first time this year and the S&P 500 index ending at a record.
The Dow industrials rose 46.97 points or 0.26% to close at 18019.35. The S&P 500 moved up 8.51 points or 0.41% to reach at 2096.99, and the NASDAQ Composite added 36.22 points or 0.75% to settle at 4893.84.
U.S. stocks had been floating near records due to recent gains, and on Friday the Dow and the S&P 500 completed the session at new record levels for the year. As of Friday’s end, the Dow is off 0.2% compared with its best closing of 18053.71, marked in December. The Nasdaq Composite stands 3.1% lower from its record peak of 5048.62, scored in 2000.
“The U.S. remains the island of stability,” said Mag Black-Scott, chief executive at Beverly Hills Wealth Management, which manages roughly $480 million. “Money is in great free flow around the world and the U.S. stock market remains the safe haven.”
Wedbush Securities equity trading Chief Ian Winer said investors were cutting their investment in retail companies to add positions in energy names as the price of crude has made a solid rebound in recent trading sessions. Crude-oil futures climbed higher 3.1% to end Friday’s trade at $52.78 a barrel.
“So many people underweighted energy-related companies and overweighted retail,” he said. The theory behind this move, according to him, was consumers were going to use savings from cheaper gasoline to buy more.
“But retail sales numbers have been disappointing and it just doesn’t seem like as much of that was happening,” he said.
Energy group was among the top risers in the S&P 500 on Friday, while retail names felt some pressure. Shares of S&P energy companies jumped 2%, helping it to emerge as the best performing sector in the index. High-dividend-yielding utilities sector enjoyed high demand in recent years as Treasury yields remained weak. But on Friday, shares of utilities companies suffered a fall of 1.6%, making it the worst-performing sector in the S&P 500. So far in February, they are down about 6.9%.
“The selloff in utilities stocks is clearly a reaction to rising interest rates,” said Hank Smith, CIO of Haverford Trust, which has over $8.2 billion in assets under management. Mr. Smith said his firm is not willing to bet on utilities stocks on fears that their earnings growth doesn’t currently justify their valuation.
“They’re trading at a rich valuation because of the insatiable demand for income,” he said.
