U.S. stocks marched to yet another set of records on Thursday, pushing the Nasdaq Composite Index above 9,000 for the first time, fueled by a postholiday rally in shares of Amazon.com and other retailers.
The Dow Jones Industrial Average ended Thursday at its 21st record of 2019, while the S&P 500 brought its yearly total of new highs to 34. The Nasdaq notched a 10th-straight closing high, its longest such streak since July 1997.
Powering the gains: signs of a busy holiday shopping season. Amazon rose 4.4% in its biggest one-day gain since January after the online retail giant reported strong activity, selling billions of items online and tens of millions of devices.
The latest market climb builds on a rally that began late this summer sparked by easing trade tensions, improving economic data and midyear rate cuts by the Federal Reserve. U.S. stocks have enjoyed one of their best years since the financial crisis.
Big-picture worries remain, including the U.S.-China trade war and pockets of economic weakness, but analysts said they had receded significantly, putting stocks on track for a good start to the new year.
“The recession has been postponed,” said Christopher Smart, senior market strategist at Barings. “Not only has the Fed intervened to provide cheaper money, U.S. consumers continue to look very healthy.”
The Dow Jones Industrial Average added 105.94 points, or 0.4%, to 28621.39. The S&P 500 rose 16.53, or 0.5%, to 3239.91. The Nasdaq climbed 69.51, or 0.8%, to 9022.39.
Shares of Amazon surged $79.56 to $1868.77, making it the best performer in the S&P 500.
The online-commerce giant said on Thursday that more people had tried its Prime expedited-delivery service than during any previous holiday season.
It also noted that its Echo Dot speaker and the iRobot Roomba 675 Robot Vacuum were among its top sellers.
Bricks-and-mortar retailers also posted gains. Macy’s gained 42 cents, or 2.6%, to $16.54 a share. Nordstrom climbed 73 cents, or 1.8%, to $41.15 a share.
Consumer-discretionary companies were the best-performing sector of the S&P 500, up 1.4% for the day. In all, 10 of 11 sectors in the broad-based index gained Thursday, with health-care stocks the only losers. Bond yields ticked lower and overseas stocks rose in Shanghai and Japan.
Strong holiday sales have highlighted the resilience of consumer spending, which has kept the U.S. economy growing this year despite trade tensions and intermittent fears of a possible recession.
Total U.S. retail sales for Nov. 1 through Christmas Eve rose 3.4% from a year earlier, according to Mastercard SpendingPulse, which tracks both online and in-store spending. Apple rose $5.64, or 2%, to $289.91. Shares of Google parent Alphabet were up $18.04, or 1.3%, to $1362.47.
The gains also came after the Labor Department said Thursday that initial jobless claims decreased by 13,000 in the week ended Dec. 21 to a seasonally adjusted 222,000, a level consistent with a healthy labor market. Economists surveyed by The Wall Street Journal had expected 220,000 new jobless claims.
The year’s move has upended expectations for low stock returns that spurred many investors into contrarian investment strategies like the “Dogs of the Dow.”
In that approach, investors buy the 10 stocks with the highest dividend yields out of the 30 Dow components at the beginning of the year and hold them over the ensuing 12 months. At the end of the year, they rebalance to maintain an investment in the top 10 dividend payers.
The strategy is called the Dogs of the Dow because the highest dividend yields typically are a function of low stock prices.
It worked in 2018, when the Dogs outperformed the Dow industrials after a sharp selloff that ran into year-end. And for the first six months of 2019, it looked like it might again. Then the Fed starting cutting interest rates. Major indexes took off, outpacing the Dogs.
Through the first 51 weeks of this year, the Dow industrials were up roughly 24%, including dividends, while the Dogs climbed about 13%.
This year would be the fourth time over the past 10 years that the broader index has beaten the Dogs, along with 2012, 2014 and 2017.
The Dogs theory is really a throwback to an earlier era of investing, when investors focused on the importance of dividends, said Edward Moya, the senior market analyst at New York brokerage Oanda.
“Throughout the tech bubble, the financial crisis, if you maintained the Dogs of the Dow methodically, it would’ve eventually panned out nicely for you,” he said.
The theory was popularized by the analyst Michael O’Higgins in his 1991 book “Beating the Dow,” though he said he developed it in the 1970s as a young stock analyst.
He offers it as a strategy at his O’Higgins Asset Management and said it still works, even if its popularity waxes and wanes over the years.
“Dividends are stable. Prices are volatile,” he said.
In a year as strong as 2019, even the out-of-favor stocks have done well. Eight of the 10 are in the black for 2019.
Procter & Gamble Co. is up 40%, including dividends. International Business Machines Corp. rose 24%. Coca-Cola Co. gained about 20%.
Johnson & Johnson rose 16%. Only two are in the red: 3M Co. lost 4.4% and Pfizer Inc. fell 6.7%.
Those gains, however, pale in comparison with the overall index’s top performers: Apple is up 84%, Microsoft rose 56%, and Visa gained 43%. And those are the returns before dividends.
Write to Alexander Osipovich at alexander.osipovich@dowjones.com and Paul Vigna at paul.vigna@wsj.com
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Stocks Hit Fresh Highs as Nasdaq Crosses 9000 - Wall Street Journal
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