Summary

The S&P 500 index chalked up a gain above 2,700 for the first time on Wednesday and other major indexes hit record closing highs as technology stocks climbed after signs of robust economic growth.

Stocks added slightly to gains late, with some support from minutes from the Federal Reserve’s last policy meeting showing the fed would likely stick to gradual interest rate hikes this year.

Earlier in the session, data indicated that factory activity increased more than expected in December, a sign of economic momentum at the end of 2017. Meanwhile, manufacturing surveys pointed to a strong start for the European economy.

Alphabet, IBM and chipmakers were among the largest drivers. The S&P 500 tech index, the best-performing S&P sector in 2017 with a 37 percent jump, ended the day up 1.1 percent.

The shares of chip manufacturers rose for a second straight session, with the Philadelphia Semiconductor index up 1.7 percent in its strongest two-day performance since June 2016.

The CBOE Volatility Index, better known as the VIX and a popular options-based gauge of expected near-term price volatility, closed at 9.15, just shy of its record low close of 9.14 on Nov. 3.

Gains in energy and healthcare also boosted the market. The S&P energy index gained 1.5 percent, while S&P healthcare index rose 1 percent.

Intel Corp ended the day down 3.4 percent. The company acknowledged a report that a design flaw in its chips could let hackers steal data but said it was working on a solution that would not significantly slow computers.

Advanced Micro Devices climbed 5.2 percent. Nvidia Corp gained 6.6 percent and Micron Technology Inc rose 3 percent.

Oracle Crop chalked up an increase of 2.3 percent after Morgan Stanley upgraded its rating on the business software maker.

Approximately 7.1 billion shares changed hands on the major domestic equity exchanges, a number that compares favorably with the 6.3 billion share daily average over the past 20 trading days, according to Thomson Reuters data.

Day’s Economic Data

Factory activity increased more than expected in December, assisted by a surge in new orders, a further sign of strong economic momentum at the end of 2017.

The economy’s robust fundamentals were also underscored by other data on Wednesday showing construction spending rising to a record high in November amid broad gains in both private and public outlays.

The Institute for Supply Management (ISM) said its index of national factory activity rose to a reading of 59.7 last month, the second-highest reading in six years, from 58.2 in November. A reading above 50 indicates growth in manufacturing, which accounts for about 12 percent of the economy.

The survey’s new orders sub-index shot up 5.4 points to 69.4, the highest reading since January 2004. Manufacturers also reported an increase in export orders. While a measure of factory employment fell 2.7 points last months it remained at lofty levels consistent with an expansion in manufacturing payrolls.

Factories also reported paying more for raw materials, with the survey’s prices index jumping by 3.5 points. Rising raw material prices bolster the view that inflation will pick up in 2018.

Manufacturing is likely to get a boost this year from a $1.5 trillion tax cut approved by Congress recently. The overhaul of the tax code, the most sweeping in 30 years, reduced the corporate income tax rate to 21 percent from 35 percent.

Business spending surged in anticipation of the corporate tax cuts. Recent weakness in the dollar and a strengthening global economy are expected to buoy exports of U.S.-made goods, which would underpin manufacturing.

The ISM survey showed manufacturers upbeat about the economic outlook. Machinery producers reported strong international sales and computer and electronic products manufacturers said they were “seeing a ramp-up with companies releasing early 2018 spend now.”

Food, beverage and tobacco products manufacturers, however, struck a more cautious note saying that while the economy and business were strong, signals of “headwinds in 2018 are persistent.”

In a separate report on Wednesday, the Commerce Department said construction spending rose 0.8 percent to an all-time high of $1.257 trillion in November. It advanced 2.4 percent on a year-on-year basis.

The manufacturing and construction reports added to data ranging from the labor market to housing and consumer spending in sketching a robust picture of the economy.

Following Wednesday’s data, the Atlanta Fed raised its fourth-quarter gross domestic product estimate by four-tenths of a percentage point to an annualized rate of 3.2 percent. The economy grew at a 3.2 percent pace in the third quarter.

In November, spending on private residential projects was up 1.0 percent to the highest level since February 2007 after rising 0.3 percent in October. The increase was in line with a recent rise in homebuilding and supported expectations that housing would boost economic growth in the fourth quarter after being a drag on GDP since the April-June period.

Spending on nonresidential structures rebounded 0.9 percent in November after falling 0.2 percent in the prior month. Overall, spending on private construction projects climbed 1.0 percent in November to a record high. That followed a 0.3 percent increase in October.

Outlays on public construction projects rose 0.2 percent in November after increasing 3.5 percent in October.