By Akane Otani and Riva Gold
The Dow Jones Industrial Average rose at the end of a month marked by several records and the blue-chip index's first close above 19000 following the U.S. presidential election.
Stocks had limped into November as investors sold risky assets and bought ones they perceived as being safer, like U.S. government bonds and gold, as polls tightened heading into Election Day. The blue-chip index fell for seven straight sessions through Nov. 4, while the S&P 500 fell ninedays in a row -- its longest stretch of losses since 1980.
President-elect Donald Trump's surprise win Nov. 8 triggered a sharp initial selloff in stock futures, but shares have rallied since. Investors plowed into shares of banks, industrials and small companies, and sold bonds and their stock-market proxies -- dividend-paying shares like utilities -- partly on bets that Mr. Trump would loosen regulation and ramp up fiscal spending.
A string of economic reports in November showing the housing market improving, consumer prices picking up and jobless claims falling have added to investors' expectations of higher growth and inflation.
Bets on the "reflation trade" have been a boon to the Dow Jones Industrial Average, which is on track to have its best month since March largely because of gains in financial and industrial shares. The blue-chip index rose more than 5% in November. Goldman Sachs Group, J.P. Morgan Chase and Caterpillar were the top performers in percentage terms as of Tuesday's close.
The Dow Jones Transportation Average, often seen as a proxy for economic health because it includes companies that move goods powering manufacturing and construction, was up 11% this month through Tuesday -- its biggest monthly gain since October 2011. The Russell 2000 of small-caps was also headed for its best month since then.
Many analysts and investors, citing generally upbeat economic reports, see stocks climbing further yet.
"There's still a runway for upside given you still have a lot of positive things going on -- you have home prices increasing, consumer net worth increasing dramatically, low unemployment and signs of wage growth," said Lowell Yura, portfolio manager at BMO Global Asset Management.
Yet others, who say that uncertainty remains around Mr. Trump's administration and policy stances, caution that the market's rally may be premature.
"We don't have these policies in place yet -- it's more of a gambler's market," said Bret Chesney, senior portfolio manager at Alpine Global.
And some, who view the market's rapid climb over the last few weeks as having been driven mostly by a pickup in investor sentiment, say weak spots like flagging business investment and soft global growth could derail the rally.
"The market's had a nice run, but it's also in the process of running out of steam," said Wouter Sturkenboom, senior investment strategist at Russell Investments.
On Wednesday, the Dow Jones Industrial Average gained 2 points, or less than 0.1%, to 19124. The S&P 500 slipped 0.3% but notched a 3.4% monthly gain, and the Nasdaq Composite fell 1.1% but added 2.6% in November.
Energy companies led the market as U.S. crude oil rocketed 9.3% to $49.44 a barrel -- its largest one-day percentage gain since February -- after OPEC representatives reached a deal to cut oil production. The S&P 500 energy sector jumped 4.8%.
Oil prices have whipsawed in recent sessions on questions about whether the Organization of the Petroleum Exporting Countries would come to an agreement to curb output amid a global glut of supply.
Investors dumped government bonds as rising oil prices -- which boost inflation expectations -- and upbeat economic data made long-term debt less attractive to hold.
The yield on the benchmark 10-year U.S. Treasury note rose to 2.364%, its highest closing level of the year, from 2.305% on Tuesday. Yields move inversely to prices.
Bonds have been under selling pressure lately, amid solid U.S. economic data -- including Tuesday's Commerce Department report that showed gross domestic product had its strongest growth in two years in the third quarter -- and expectations that the Federal Reserve will soon raise interest rates.
Those expectations have lifted the dollar, which was recently up 1.7% against the yen. The WSJ Dollar Index, which measures the currency against 16 others, rose 0.6% Wednesday. Higher rates make the currency more attractive to yield-seeking investors.
Elsewhere, the Stoxx Europe 600 rose 0.3% for the day and 0.9% for the month, underperforming its developed-market peers amid continuing jitters about the political climate.
Japan's Nikkei Stock Average was flat but ended the month over 5% higher than it started, bolstered by a steady strengthening of the dollar against the yen.
Write to Akane Otani at firstname.lastname@example.org and Riva Gold at email@example.com
(END) Dow Jones Newswires
November 30, 2016 16:25 ET (21:25 GMT)
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