U.S. equities and stock exchange traded funds strengthened Tuesday, with dividend-paying stocks leading the charge.
The S&P 500 Index, along with related funds including the SPDR S&P 500 ETF (NYSEArca: SPY), iShares Core S&P 500 ETF (NYSEArca: IVV) and Vanguard 500 Index (NYSEArca: VOO), were up 0.2% Tuesday.
Meanwhile, utilities stocks in the S&P 500 increased 0.8% and were among the best performers in the broad index for the day, along with other dividend-paying segments like financials up 0.6% and real estate 0.3% higher.
U.S. markets have been hovering around record levels in recent months, despite concerns that political risk in Washington, D.C. could derail the Trump administration’s plans for pro-growth policy changes, like tax cuts, deregulation and fiscal stimulus. Additionally, a strong corporate season and ongoing economic growth are bolstering equities and fueling a risk-on sentiment.
“First-quarter profits were clearly exceptional–not just better than what analysts forecasted – and I think that’s the primary reason why this market just keeps driving higher,” Ed Keon, managing director and portfolio manager with QMA, told the Wall Street Journal.
Traders also tried to assess President Donald Trump’s first full budget plan Tuesday after the administration revealed a hike in infrastructure and military spending, along with a slew of cuts, including health care and food assistance programs for the poor, in an attempt to reduce the government’s spending by $3.6 trillion and balance the budget over the next decade, reports Tanya Agrawal for Reuters.
Many, though, anticipate Trump’s proposed tax plan will unlikely be approved by Congress in its current form.
Without any further catalysts for a continued risk-on outlook, the markets may continue to plod along on its current course.
“We’re likely to be in a sideways period in the market for the next few weeks as there are quite a bit of pieces of news the market is digesting, including geopolitical developments in Washington and globally,” Lisa Kopp, head of traditional investments at U.S. Bank Wealth Management, told Reuters.
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