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VOL. 45 | NO. 44 | Friday, October 29, 2021

Stocks gain, pushing the Dow Jones industrials past 36,000

The Associated Press

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Wall Street added to its recent run of milestones Tuesday as stock indexes hit new highs again and the Dow Jones Industrial Average closed above 36,000 points for the first time.

The Dow and benchmark S&P 500 each rose 0.4%. The Nasdaq gained 0.3%. The three indexes also notched all-time highs on Monday.

The gains were broad, with all but two of the 11 sectors in the S&P 500 closing higher. Technology and health care stocks helped power much of the advance. Losses in energy stocks and a mix of companies that rely on direct consumer spending tempered the market's gains.

Trading continued to be wobbly, with the major indexes all briefly slipping into the red before recovering. The latest modest gains came ahead of more news this week from the Federal Reserve and on the jobs market. Investors were also reviewing a heavy load of corporate earnings for more clues as to how companies are faring as the economy moves past the virus pandemic.

Wall Street has been pleasantly surprised that corporate earnings reports have proven to be stronger than expected, despite worries about the impact on profits from supply disruptions and rising inflation.

"They seem to be dealing with the supply chain issue, as far as revenue and costs go, so far," said Liz Young, chief investment strategist at SoFi. "We all expected that third-quarter earnings might be held back slightly by some of those pressures."

The S&P 500 index extended its winning streak into a fourth day Tuesday, rising 16.98 points to 4,630.65. The Dow gained 138.79 points to 36,052.63, and the tech-heavy Nasdaq added 53.69 points to 15,649.60.

Small-company stocks also bounced back from an early pullback, nudging the Russell 2000 index to its first all-time high since March. The Russell gained 3.74 points, or 0.2%, to 2,361.86.

Technology stocks made solid gains. Cloud networking company Arista Networks surged 20.4% for the biggest gain in the S&P 500 after giving investors an encouraging financial forecast following a strong third-quarter report.

Health care stocks also rose. Prescription drug distributor McKesson gained 5.2% after raising its profit forecast. Pfizer gained 4.1% after delivering a strong profit report.

Bond yields slipped. The yield on the 10-year Treasury fell to 1.54% from 1.57% late Monday.

Crude oil prices slipped 0.2% and weighed down energy stocks. Exxon Mobil fell 1.2%.

Wall Street has been focusing on a steady flow of corporate earnings over the last few weeks. The results helped drive gains for the major indexes after a choppy summer when COVID-19 cases surged. That wave has since subsided, but rising inflation as the economy recovers remains a key concern.

Investors will be focused on the latest comments from the Federal Reserve's latest policy meeting Wednesday, when the central bank is expected to disclose plans to ease the extraordinary support measures put in place at the beginning of the pandemic to shore up the markets and economy.

Chair Jerome Powell has signaled the Fed will announce after its policy meeting that it will start paring its $120 billion in monthly bond purchases as soon as this month. Those purchases are intended to keep long-term loan rates low to encourage borrowing and spending.

"We all know the Fed is going to unwind, what's not known is the language around employment and how the Fed frames what success looks like," said Robert Schein, chief investment officer at Blanke Schein Wealth Management.

The employment market recovery has been a key focus for the central bank. The job market has been improving, but it has mostly lagged the rest of the economic recovery as people are hesitant to return to work despite an abundance of job openings. Investors will get another update Friday when the Labor Department releases its jobs report for October.

The central bank's plan to trim its bond purchases also comes as businesses and consumers contend with higher prices for raw materials and finished goods. Supply chain problems are cutting into corporate finances and prompting companies to raise prices.

Investors will get another update on services, which make up a big part of the economy, when the Institute for Supply Management releases its service sector index for October on Wednesday.

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