S&P climbs to another record high, financial firms lead after BofA settlement

Stocks extended this week's rally, carrying the S&P 500 to a new record closing high and the Dow back above 17K following a batch of upbeat economic reports and in anticipation of dovish remarks from Janet Yellen when she speaks tomorrow at Jackson Hole.

U.S. jobless claims fell to a better than expected 298K last week, existing home sales rose 2.4% in July, and the Philly Fed index rose to its highest level since March 2011.

Shares of financial firms led after BofA (+4%) agreed to pay $16.6B to settle the government's accusations it sold flawed mortgage securities in the run-up to the financial crisis; investors sense that a big overhang has been removed and the bank can now focus on its core business rather than worry about litigation.

Retailers struggled following disappointing earnings from Sears, Kirklands, Buckle, Bob-Ton and Dollar Tree.

Participation remained light, with slightly more than 550M shares traded at the NYSE.

Treasurys rose despite the gains in equities; the 10-year note added 7 ticks with its yield slipping 2 bps to 2.41%.

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