Stocks Regain Upward Momentum

Early turmoil in Europe in the aftermath of the Italian referendum failed to derail Wall Street’s record-setting run as the Dow Jones Industrial Average set another all-time high, fueled by gains in the energy and financial sectors. And although the Dow trimmed its early triple-digit gain, maintaining only a modest gain at the close, the S&P 500 and Nasdaq Composite outperformed with the technology sector boosting the Nasdaq by more than 1%.

Italian voters overwhelmingly rejected a referendum that would change its constitution to give more power to the central government. The result was a blow to Italian prime minister Matteo Renzi who handed in his resignation, as well as to the Italian financial sector which was counting on measures from Renzi to recapitalize banks.

But European bourses proved remarkably resilient and rallied later in the session, boosting U.S. markets in early trading, with early gains amplified by higher oil prices, and strength in the financial sector amid expectations for the Federal Reserve to hike rates next week on data from the services sector.

The Institute for Supply Management non-manufacturing index set a 13-month high of 57.2, beating Wall Street expectations for a gain to 55.5 from October’s 54.8.

And although a comparable index from U.S. purchasing managers declined slightly last month to 54.6 from 54.8 in October, it is still at its highest level in eleven months.

Of the eleven S&P sectors, only industrials, healthcare and consumer staples closed lower, while Dow advancers were nearly evenly matched with decliners but with component stocks Goldman Sachs (GS), JP Morgan (JPM) and Nike (NKE) helping to keep the blue-chip index above water.