Following the S&P 500, it was the Dow, which registered an all-time record close on Tuesday on the back of factors including easing Brexit concerns and a rise in oil prices . The Dow rose nearly 0.7%, or 120.74 points, to close at an all-time high level of 18,347.67. Against this backdrop, let's have a look at the key factors and components of the blue-chip index that led the Dow to hit the all-time high.
Key Factors Behind Yesterday's Gain
Brexit fears, which remained one of the major concerns behind the recent sell-offs, abated by a significant extent following news that Home Secretary Theresa May will succeed British Prime Minister David Cameron following his resignation today. This played a major role in boosting investor sentiment over the past two days.
Moreover, victory of Japan's Prime Minister Shinzo Abe's Liberal Democratic Party in the upper house election on Sunday also continued to lead major benchmarks higher. It is speculated that Abe's victory will lead to the introduction of new and more aggressive stimulus measures to boost Japan's economic growth.
Also, after slumping heavily on Monday, crude prices bounced back significantly yesterday. The prices of WTI and Brent crude surged 4.4% and 4.6% to $46.80 per barrel and $48.47 a barrel, respectively. Strong gains in crude led The Energy Select Sector SPDR Fund (XLE), which tracks the performance of the broader energy sector rose 2.5%, the highest among the S&P 500 sectors. Meanwhile, June's encouraging economic data, which helped to raise rate hike possibilities, continued to have a positive impact on the financial sector.
Major Gainers Among Dow Components
Yesterday's top five gainers among the Dow components emerged from five major sectors including financials, materials, industrials, consumer discretionary and technology. Rising rate hike possibilities helped The Goldman Sachs Group, Inc. GS to emerge as the biggest contributor among the Dow components. Shares of Goldman Sachs rose 3.1% and contributed nearly 120 points to Dow's gain.
Also, better-than-expected earnings results from Alcoa Inc. AA , which unofficially kicked off the second-quarter earnings season, helped the materials sector to come up with the second biggest gain among the broader S&P 500 sectors. This in turn helped E. I. du Pont de Nemours and Company DD to emerge as the second biggest gainer among the Dow components. Shares of du Pont rose nearly 2.7% yesterday.
Caterpillar Inc. CAT - one of the important companies in the industrials sector - was the third highest gainer among the components of the blue-chip index. Caterpillar, which continued to register healthy gains this year even in an uncertain environment, played an important role in boosting the Dow yesterday. While shares of Caterpillar rose 2.6% on Tuesday, it gained nearly 17.4% over the year-to-date frame.
The fourth biggest gainer - NIKE, Inc. NKE - is from the consumer discretionary sector, which is believed to be one of the prominent sectors that are poised to benefit from an improving domestic economic scenario. Shares of NIKE, which was also the best performing Dow component last year, gained 2.2% yesterday and contributed significantly to Dow's all-time high. Moreover, the tech company, Intel Corporation INTC made a notable contribution to boost Dow. Shares of Intel rose more than 1.6% and was the fifth best performing Dow component on Tuesday.
Other Dow Components in Focus
As the blue-chip index reached its all-time high, last year's top performers will also remain on investor's radar in addition to those that led the blue-chip index to achieve the level. As already mentioned, NIKE, which gained nearly 29.1% last year and was one of the major contributors to Dow's gain yesterday, was the best performer among the Dow components last year.
Additionally, The Home Depot, Inc. HD , McDonald's Corp. MCD , General Electric Company GE and Visa Inc. V were the other top-performers among the components of the blue-chip index in 2015. Last year, shares of Home Depot, McDonald's, General Electric and Visa gained 27.5%, 24.6%, 20.8% and 16.3%, respectively.
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HOME DEPOT (HD): Free Stock Analysis Report
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GENL ELECTRIC (GE): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
CATERPILLAR INC (CAT): Free Stock Analysis Report
ALCOA INC (AA): Free Stock Analysis Report
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VISA INC-A (V): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
