IBB iShares Biotechnology ETF

By Mark DeCambre and Wallace Witkowski, MarketWatch

Dow industrials flirts with 300 points

U.S. stocks were on a record run in Wednesday afternoon trade.

The Dow industrials, S&P 500 and small-cap focused Russell 2000 all rose to all-time highs in intraday trade as stocks shook off early weakness in the health-care sector to extend gains.

The Dow Jones Industrial Average extended its all-time intraday trading highs and was last 277 points, or 1.4%, at 19,528, on track for its third consecutive record close. Gains in American Express Co. (AXP), Home Depot Inc.(HD) and Nike Inc.(NKE) outweighed a slump in health-care shares of Johnson & Johnson Inc.(JNJ), Pfizer Inc. (PFE), and Merck & Co.(MRK)

Health-care names tumbled early Wednesday after President-elect Donald Trump threatened to cut drug prices (http://www.marketwatch.com/story/president-elect-trumps-promise-to-bring-down-drug-prices-sends-biotech-etfs-slumping-2016-12-07). "I'm going to bring down drug prices," Trump told Time in his "Person of the Year" cover story (http://time.com/time-person-of-the-year-2016-donald-trump/). "I don't like what has happened with drug prices."

The iShares Nasdaq Biotechnology ETF(IBB), the most widely used way to place bets on the biotech space, sank almost 3%.

However, the broader market traded firmly higher later in the session, shaking off those early concerns, in midafternoon trade ahead of key meetings of European and U.S. central banks, which could influence investor sentiment.

The Nasdaq Composite Index which had been trading in negative territory, turned higher, and was last up 38 points, or 0.7%, at 5,372, just about 26 points shy of matching its trading high.

The S&P 500 index set an intraday trading high, exceeding the one set Nov. 30, and was most recently up 1% at 2,234, with all but the health-care sector, which was off 1.1%, in the green.

Highlighting how markets were broadly climbing, the Dow Jones Transportation Average also traded at a record intraday high of 9,315.10, markings its first record in two years.

Meanwhile, the Russell 2000 index , a gauge of the shares of small-capitalization companies touched an intraday trading record of 1,361.34. The index has climbed more than 13% since the U.S. presidential election.

The stock market's postelection ascent has been underpinned by hopes that Trump will follow through with a slate of pro-business policies, including boosting infrastructure spending and cutting taxes for the wealthy.

Frank Cappelleri, executive director at Instinet LLC, said investors caught flat-footed by the sustained rally following Trump's unexpected Election Day win are still rotating into stocks.

"Investors may see a few days of a pause as a reason to get back involved," said Cappelleri. He said the second reason why this move can extend higher is because investors betting on a downturn "are a little gun-shy" after getting burned in November.

Other strategist say the market has traded in a relatively narrow range since 2014 and make the case that the Trump rally has only lasted a month and has a shot at moving higher into the end of the year.

"It has only been about four weeks since the breakout for stocks and a lot of people are looking at this to be quickly aborted, but the market shouldn't be faulted for expecting more," said Bruce Bittles, chief investment strategist at brokerage firm Robert W. Baird & Co., a brokerage.

Another factor that may be supporting stock gains is the belief that traditional selling patterns that occur at the end of the year aren't being followed because investors are making bets on lower taxes under a Trump administration. "Anyone who has gained [in December] are not going to want to sell their stocks and pay taxes in April 2017, when they can wait till 2018," he said. Of course taxes on profits from the sale of assets could be higher then, but Bittles says Wall Street thinks that it makes more sense to wait and see, which is reducing traditional selling of stocks to take year-end profits and encouraging buying.

"It appears that nothing can stop the equity rally," said Naeem Aslam, chief market analyst at ThinkMarkets UK, in a note.

However, some strategists and traders are concerned that a pullback (http://www.marketwatch.com/story/gundlach-says-the-trump-trade-is-losing-steam-2016-12-02) might be in the offing because the market has climbed too fast and too furiously.

Indeed, the CBOE Volatility Index trading at just under 12, implies that investors may be getting complacent. "Buying volatility at these levels may not be that much of a bad idea," Aslam said.

Read:Why the rally by U.S. stocks is 'just getting started'--in one chart (http://www.marketwatch.com/story/why-the-rally-by-us-stocks-is-just-getting-started-in-one-chart-2016-11-28)

Other markets:European stocks (http://www.marketwatch.com/story/credit-suisse-miners-push-stoxx-europe-600-toward-highest-close-since-september-2016-12-07) finished higher, with banks and miners among the session's big winners, and Asian markets closed broadly higher (http://www.marketwatch.com/story/bank-stocks-surge-as-asian-markets-post-gains-2016-12-06). Oil futures (http://www.marketwatch.com/story/oil-prices-continue-to-backtrack-as-investors-question-opec-deal-2016-12-07) retreated, while gold futures and a key dollar index (http://www.marketwatch.com/story/dollar-flattens-out-as-investors-look-ahead-to-fed-ecb-meetings-2016-12-07) were modestly higher.

Individual stocks: Ahead of the opening bell, Brown-Forman Corp.(BFA) reported quarterly sales that topped estimates (http://www.marketwatch.com/story/brown-forman-sales-top-estimates-sticks-with-full-year-view-2016-12-07), as the maker of Jack Daniel's whiskey backed its full-year forecast. Shares declined 1.7%.

Handbag seller Vera Bradley Inc.(VRA) cut its full-year outlook (http://www.marketwatch.com/story/vera-bradley-shares-slump-as-company-cuts-outlook-2016-12-07) after missing its own guidance range for the third quarter. Shares tumbled 7.8%.

Economic news: A report on consumer credit is due at 3 p.m. Eastern.

The JOLTS report, or Job Openings and Labor Turnover Survey, showed that job openings were unchanged at 5.5 million in October, according to Labor Department.

Investors also are bracing for the European Central Bank's policy-setting meeting (http://www.marketwatch.com/story/how-italys-no-vote-might-be-the-ecbs-silver-lining-2016-12-05) on Thursday. The Federal Reserve entered the so-called blackout period Tuesday ahead of its meeting Dec. 13-14, so there are no Fed speakers on the docket.

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--Victor Reklaitis in London contributed to this article.

(END) Dow Jones Newswires

December 07, 2016 14:05 ET (19:05 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.