The Dow closed at record highs for second-straight day Wednesday, led by gains in cyclical stocks on data showing consumer spending has returned after a two-month hiatus and further signs that market-friendly monetary policy will continue for some time.
The Dow Jones Industrial Average rose 0.29%, or 90 points, to a record high of 31,613.28. The S&P 500 was down 0.02%, while the Nasdaq Composite slipped 0.58%.
The Federal Reserve minutes signaled the central bank is no hurry to rein in its loose monetary policy measures, allaying investor fears somewhat that the pick up in inflation expectations could spark the Fed into tightening action.
"With the economy still far from those goals, participants judged that it was likely to take some time for substantial further progress to be achieved," the Fed's minutes showed. "Many participants ... [noted] that changes in relative prices could temporarily raise measured inflation but would be unlikely to have a lasting effect."
The Fed's lower-for-longer outlook on monetary policy arrived after data showed the retail sales Retail sales rebounded in January, rising 5.3% from a decline in December, topping economists forecast for a 1.1% increase.
"January's performance was very impressive … fiscal stimulus is the clear driver, and today's report is proof that there's significant propensity to spend stimulus payments," Jefferies (NYSE:JEF) said in a note. "There's more coming in March, with additional supports from the reopening and vaccinations, so this is just the beginning."
Cyclical stocks - those that move in tandem with the pace of the economy - rose with higher oil prices as the cold snap sweeping across the U.S. offset reports that Saudi Arabia plans to boost oil output and ditch its recent production cut.
Devon Energy (NYSE:DVN), Cabot Oil & Gas (NYSE:COG) and Chevron (NYSE:CVX) were among the biggest gainers in the energy sector.
Chevron was also boosted by a regulatory filing on Tuesday showing that Berkshire Hathaway invested $4.1 billion in Chevron.
Financials were flat on the day as high-flying bank stocks, which have largely led the gains for the sector, struggled to turn positive after Treasury yields took a breather.
Wells Fargo (NYSE:WFC), however, rallied more than 5% as the Federal Reserve is reportedly set to approve the bank's plans to overhaul its governance functions. The approval would bring the bank closer to the removal of an asset cap limiting the bank to $1.95 trillion in assets.
Technology stocks stifled gains in the broader market as the pick up in yields has some suggesting it may be time to be cautious on growth stocks.
Shopify (NYSE:SHOP) fell more than 3% even as its fourth-quarter results topped analysts' estimates, following a pandemic-fueled pick up in business moving operations online.
Palantir Technologies Inc (NYSE:PLTR) slipped 3% after Goldman Sachs (NYSE:GS) upgraded its rating on the company to buy from neutral, citing increased visibility into the company’s growth.
The sluggish day on Wall Street for stocks has not drowned out the bullish sentiment, with analysts saying a potential correction was unlikely to reverse the longer-term upward trend.
"[W]e would note that some type of pullback / consolidation phase is warranted at this stage, … Corrections are standard throughout the course of every structural / secular bull cycle, and we believe the S&P in particular has enough bandwidth to sustain a correction of -10-15% without negating its longer-term uptrend," Janney Montgomery Scott said.