By Saeed Azhar, Johann M Cherian and Purvi Agarwal
(Reuters) - Wall Street's main indexes ended higher on Monday, with the small-cap Russell 2000 index hitting an all-time high after Scott Bessent's nomination as U.S. Treasury secretary helped push bond yields lower.
Focus also turned to talks of a ceasefire deal between Israel and Lebanon, which pushed oil prices lower, dragging the Energy index 2% lower.
President-elect Donald Trump ended weeks of speculation when he named his choice late on Friday, with some investment strategists saying Bessent could take measures to restrain further government borrowing, even as he follows through on fiscal and trade campaign pledges.
The nomination of Bessent has eased some of the fiscal concerns about possible new tariffs, which had pushed bond yields higher ahead of the election.
"This time, focus is on tariff policy - especially now that the choice of Scott Bessent as Treasury secretary seems to have allayed major fiscal concerns," said James Reilly, senior market economist at market desk Capital Economics.
According to preliminary data, the S&P 500 gained 17.81 points, or 0.30%, to end at 5,987.15 points, while the Nasdaq Composite gained 51.50 points, or 0.27%, to 19,055.15. The Dow Jones Industrial Average rose 439.02 points, or 0.99%, to 44,735.53.
Advancing issues outnumbered decliners by a 3.01-to-1 ratio on the NYSE. There were 836 new highs and 40 new lows on the NYSE.
The small-cap index hit an all-time intraday high of 2,466.49, eclipsing the record level it touched three years ago, as Treasury yields dropped sharply, with the 30-year bond leading the yield declines across the board.
"Areas that were lagging for most of this year are beginning to outperform, such as the small-cap and the mid-cap stocks, not just due to Trump, but also due to the Federal Reserve cutting rates," said Adam Sarhan, chief executive of 50 Park Investments in New York.
Expectations that Trump, along with a Republican Congress, can make good on his promise of business-friendly policies have been the latest tailwinds for small-cap companies. They have been in the spotlight since the U.S. Federal Reserve commenced its monetary policy easing cycle in September.
Lower yields helped the rate-sensitive Real Estate sector rise, while the Housing index also surged 4.5%.
Barclays (LON:BARC) raised its full-year 2025 forecast for the S&P 500, while Deutsche Bank (ETR:DBKGn) set its target at 7,000 points by the end of 2025.
Concerns remain, however, that inflationary pressures could spike and slow the pace of the Fed's policy easing.
Investors have recently swung between expectations of a pause versus a further cut in interest rates at the Fed's December meeting. The CME Group's (NASDAQ:CME) FedWatch Tool shows a 56.2% probability the central bank will deliver another 25 basis-point cut.
Consumer Discretionary stocks led sectoral gains, aided by Amazon.com (NASDAQ:AMZN)'s 2.2% rise.
The Personal Consumption Expenditure report, the central bank's preferred inflation gauge, will be on investors' radar later this week, which includes the U.S. Thanksgiving holiday.
Macy's (NYSE:M) fell 2.2% after the department-store operator delayed the publication of its third-quarter results due to an accounting issue.
Bath & Body Works (NYSE:BBWI) raised its forecast for full-year adjusted profit, sending the retailer's shares up 16.5%.
The S&P 500 posted 106 new 52-week highs and no new lows while the Nasdaq Composite recorded 352 new highs and 66 new lows.
Volume on U.S. exchanges was 16.69 billion shares, compared with the 14.93 billion average for the full session over the last 20 trading days.