By Caroline Valetkevitch
NEW YORK — The SP 500 ended above 2,100 at another record high Tuesday as optimism grew that a debt deal would be reached with Greece and as bond prices sold off.
In a possible sign of progress for Greece, a source told Reuters the country intends to ask for an extension of a loan agreement Wednesday. The report follows a collapse of deal negotiations on Monday, which led to European Union finance ministers pressuring the country to remain in an international financial rescue program.
Late in the session, though, broadcaster ZDF reported the German finance minister said an extension was not up for debate.
Because bonds are so low globally, it creates an interest in equities that perhaps the risk is worth taking to get the higher return.
U.S. Treasury debt prices sold off, pushing benchmark 10-year note yields to seven-week peaks, on expectations the Federal Reserve could bump up rates as early as June. Minutes from the last Fed meeting are due Wednesday.
“We’ve seen more of a risk-on trade,” said Bucky Hellwig, senior vice president at BBT Wealth Management in Birmingham, Alabama. “Because bonds are so low globally, it creates an interest in equities that perhaps the risk is worth taking to get the higher return.”
Among the SP 500’s biggest positives, shares of Medical device maker Medtronic Plc, which last month completed the $49.9 billion purchase of Ireland-based Covidien Plc, rose 3.7 percent at $78.07. Medtronic reported a better-than-expected third-quarter profit, driven by solid growth in its cardiac and vascular business.
The Dow Jones industrial average (^DJI) rose 28.23 points, or 0.16 percent, to 18,047.58, the Standard Poor’s 500 index (^GSPC) gained 3.35 points, or 0.16 percent, to 2,100.34, a record high. The Nasdaq composite (^IXIC) added 5.43 points, or 0.11 percent, to 4,899.27.
U.S.-listed shares of the National Bank of Greece ended up 1.2 percent at $1.63 after falling more than 13 percent earlier in the session.
Shares of Transocean (RIG) recovered to close flat $19.05 a day after the company slashed its dividend and said its chief executive stepped down.
Among decliners, Celsus Therapeutics plummeted 81.4 percent to $1.15 after the company’s lead drug failed a mid-stage study. VBL Therapeutics dropped 65.5 percent to $4.87 after it said it would stop developing its experimental inflammatory drug to fight ulcerative colitis and psoriasis.
A fragile Ukraine truce added uncertainty to the market. In eastern Ukraine, Pro-Russian rebels fought their way into an encircled government bastion and were battling street-to-street, all but dashing hopes that a European-brokered peace deal would end months of conflict.
About 6.2 billion shares changed hands on U.S. exchanges, below the 6.7 billion average for the last five sessions, according to BATS Global Markets.
NYSE decliners outnumbered advancers 1,776 to 1,337, for a 1.33-to-1 ratio; on the Nasdaq, 1,533 issues rose and 1,199 fell, a 1.28-to-1 ratio favoring advancers.
The SP 500 posted 64 new 52-week highs and 2 new lows; the Nasdaq composite recorded 115 new highs and 22 new lows.
What to watch Wednesday:
- At 8:30 a.m. Eastern time, the Labor Department releases the Producer Price Index for January, and the Commerce Department releases housing starts for January.
- The Federal Reserve releases industrial production for January at 9:15 a.m.
- The Federal Reserve releases minutes from January interest-rate meeting at 2 p.m.
These selected companies are due to release quarterly financial results:
- Actavis (ACT)
- Avis Budget Group (CAR)
- Cinemark Holdings (CNK)
- Duke Energy (DUK)
- Fidelity National Financial (FNF)
- Garmin (GRMN)
- Hilton Worldwide (HLT)
- Hyatt Hotels (H)
- Marathon Oil Corporation (MRO)
- Marriott International (MAR)
- Questar (STR)
- Sabre (SABR)
- SolarCity (SCTY)
- Williams Cos. (WMB)
In 2013, in part to meet federal pollution-control mandates, Maryland legislators enacted fees on property owners in Baltimore and nine other Maryland counties, aimed at curbing storm water runoff. The fees were meant to fund programs to improve the water quality of the Chesapeake Bay, the largest marine estuary in the U.S. Sounds simple enough, but the way Maryland legislators wrote the law has led to an angry backlash in some corners against this so-called “rain tax.” One way localities calculate the tax is by measuring how much of a landowner’s tract is “impervious” to precipitation seeping into the ground. So the more you’ve developed it with buildings, driveways, tennis courts and the like, the less it will absorb and the more you pay. That’s how the tax is being implemented (through aerial and satellite photos) in Montgomery County, a heavily developed suburb of Washington, and many landowners are up in arms. New Maryland Gov. Larry Hogan, a Republican, campaigned against this tax in his winning 2014 campaign and has introduced legislation to repeal it, though it’s not clear that will fly with Democratic state legislators. Money still needs to be raised to satisfy the federal pollution mandates, but the methods may change.
5. Maryland: The rain?
Kansas is among a bevy of jurisdictions that allows sale of lower-alcohol beer (the term of art is “cereal malt beverage”) in convenience and grocery stores. But Kansas also taxes “3.2” beer differently — and there lies the rub. At a liquor store, all products, including, say, a conventional six-pack of Budweiser (with 5 percent alcohol by volume), are taxed at a special rate of 8 percent. At the convenience store down the street, however, ordinary sales tax is levied on the lower-alcohol, cereal malt beverage bottle of Bud. That often ends up being more than the 8 percent alcohol tax. In Pomona, Kansas, for example, the effective rate on the weaker beer would be 9.7 percent. Go figure.
6. Kansas: Weak beer
When it comes to taxation, the rule is generally the stronger the booze, the higher the tax (that’s why Kansas’s beer tax scheme is an anomaly). California follows that curve, but at 100 proof, you better be ready to pay through the nose. Distilled spirits are taxed at $3.30 a gallon if below 100 proof, or 50 percent alcohol. Go over that, like with Bacardi 151, and the tax doubles to $6.60. Maryland also notes the 100 proof point, but it only adds 1.5 cents per proof, per gallon to the relatively modest liquor tax of $1.50 per gallon, taking the Bacardi 151 to $2.27 per gallon.
7. California: Strong liquor