By Sinead Carew
(Reuters) - Wall Street's major indexes extended the New Year rally to close at record levels on Tuesday on investor optimism ahead of quarterly earnings reports and hopes for easing tensions with North Korea.
Defensive S&P sectors - utilities, real estate and telecommunications - were out of favour, while bank stocks were boosted by rising U.S. 10-year Treasury yields. Healthcare stocks rose with the sector in focus on the second day of an industry conference.
The S&P 500 and Nasdaq registered their sixth closing record highs in a row. The Dow also ended at record levels after it had snapped a 3-day run of closing highs in Monday's session.
Some investors were reassured that North and South Korea held their first talks in more than two years, which Washington described as a good first step in solving the North's nuclear missile programme crisis. Pyongyang said it would not discuss weapons that were aimed only at the United States.
"The diplomacy taking place between North Korea and South Korea might circumvent some type of military action. Anything that would de-risk the peninsula would be viewed favourably by investors," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
The Dow Jones Industrial Average <.DJI> rose 102.8 points, or 0.41 percent, to 25,385.8, the S&P 500 <.SPX> gained 3.58 points, or 0.13 percent, to 2,751.29 and the Nasdaq Composite <.IXIC> added 6.19 points, or 0.09 percent, to 7,163.58.
"There will be some noise there with tax adjustments, but the forward-looking comments ought to be pretty positive. Investors are buying into that," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.
The S&P financial sector <.SPSY> ended 0.8 percent higher after yields on the 10-year U.S. Treasury note hit a 10-month high after the Bank of Japan said it will trim its purchases of Japanese government bonds.
While investors are hopeful about global economic growth and tax-cut led gains for corporate earnings, they are anxious about whether the tax-overhaul could overheat inflation and lead to a sharper than expected rise in interest rates.
After a lukewarm December jobs report, signs of a pickup in inflation could come in the monthly consumer price report due on Friday, on the same day that big U.S. banks are set to kick off the fourth-quarter earnings season.
Chip stocks dragged on the technology sector <.SPLRCT>, which fell 0.3 percent. Intel
Declining issues outnumbered advancing ones on the NYSE by a 1.41-to-1 ratio; on Nasdaq, a 1.19-to-1 ratio favoured decliners.
Volume on U.S. exchanges was 6.77 billion shares, above the 6.3 billion average for the full session over the last 20 trading days.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)