Banks lift S&P; Tesla drives Nasdaq to record high

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(Reuters) – Wall Street edged higher on Wednesday as banks stocks lifted the S&P 500 and the Dow, while gains for Amazon and Tesla helped the Nasdaq notch another day of record gains.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., May 29, 2018. REUTERS/Brendan McDermid

Tesla shares rose 6.1 percent after billionaire Chief Executive Officer Elon Musk reassured shareholders that building 5,000 of its mass-market Model 3 cars per week by the end of June was “quite likely”.

However, Facebook fell 1.3 percent after the social networking company confirmed it had collaborated with at least four Chinese companies that involved sharing certain user data.

Technology stocks have been on a tear in the recent days, resilient to issues that have roiled the financial markets including trade talks between the United States and its partners, geopolitical worries and rising interest rates.

“There’s a strong fundamental background and evidence that effects of tax reforms are still largely ahead, and in the real economy they are starting to flow through,” Thomas Martin, senior portfolio manager at Globalt Investments in Atlanta, Georgia said.

Facebook and Google parent Alphabet, in the largest-ever shakeup of the stock market’s broad business sectors, will move from the top-performing technology sector to telecommunications and media stocks.

Analysts have said that the move could inject more volatility into the markets as funds tracking these indexes will be forced to trade billions of dollars of stock to realign their holdings by a Sept. 28 effective date.

U.S. officials were weighing an offer by China to import an extra $70 billion of American goods over a year as Beijing tries to defuse a potential trade war between the world’s two largest economies, according to sources.

U.S. President Donald Trump is due to attend a G7 summit in Canada later this week, where leaders were likely to discuss the global economy and concerns about U.S. trade policy.

Trump last week pushed on with imposing the tariffs — 25 percent on steel and 10 percent on aluminum — on Canada, the EU and Mexico, with Mexico retaliating by putting tariffs on American products ranging from steel to pork and bourbon.

The benchmark U.S. Treasury yield rose to a near two-week high after data showed that U.S. trade deficit unexpectedly fell to a seven-month low in April, supporting the view of an acceleration of domestic economic growth in the second quarter.

Bank stocks often trade in line with Treasury yields, as higher rates can boost their profits. The S&P banking index was up 1.8 percent.

At 11:56 a.m. EDT the Dow Jones Industrial Average was up 199.27 points, or 0.80 percent, at 24,999.25, the S&P 500 was up 10.50 points, or 0.38 percent, at 2,759.30 and the Nasdaq Composite was up 17.86 points, or 0.23 percent, at 7,655.72.

Advancing issues outnumbered decliners for a 1.12-to-1 ratio on the NYSE; for a 1.39-to-1 ratio on the Nasdaq.

The S&P index recorded 45 new 52-week highs and 10 new lows, while the Nasdaq recorded 214 new highs and 14 new lows.

Reporting by Medha Singh in Bengaluru; Editing by Shounak Dasgupta

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