S&P 500 closes above 1,700 points for first time
NEW YORK (AP) — Stocks roared back to record highs on Thursday, driven by good news on the economy.
The Standard & Poor’s 500, the Dow Jones industrial average and the Russell 2000 index set all-time highs. The S&P broke through 1,700 points for the first time. The Nasdaq hit its highest level since September 2000.
The gains were driven by a steady flow of encouraging reports on the global economy.
Overnight, a positive read on China’s manufacturing helped shore up Asian markets. An hour before U.S. trading started, the government reported that the number of people applying for unemployment benefits last week fell sharply. At mid-morning, a trade group said U.S. factories revved up production last month. And while corporate earnings news after the market closed Wednesday and throughout Thursday brought both winners and losers, investors were able to find enough reports that they liked, including those from CBS, MetLife and Yelp.
“It’s just a lot of things adding up,” said Russell Croft, portfolio manager of the Croft Value Fund in Baltimore. “It’s hard to put your finger on why exactly, but basically it’s a bunch of pretty good data points coming together to make a very good day.”
Overall, analysts said, the news was good but not overwhelmingly so. Enough to suggest that the economy is improving, but not enough to prompt the Federal Reserve to withdraw its economic stimulus programs.
Earnings results covered a wide range. Boston Beer, which makes Samuel Adams, and home shopping network operator HSN rose after beating analysts’ estimates for earnings and revenue. Kellogg, health insurer Cigna and cosmetics maker Avon were down after beating earnings predictions but missing on revenue.
It’s becoming a familiar template this year. Stock indexes have been setting record highs since April even while the underlying economy is often described as improving, but hardly going gangbusters.
While layoffs are steadily declining, companies aren’t hiring as quickly as they did before the financial crisis and Great Recession. The economy is growing, but not fast enough to drive significant job growth. The Commerce Department reported this week that gross domestic product, or GDP, the broadest measure of the economy, grew at a tepid annual rate of 1.7 percent in the second quarter.
“They’re not great numbers, but they’re positive and they’re continuing to grow,” said Tim Courtney, chief investment officer of Exencial Wealth Advisors in Oklahoma City. “That’s about all the market needs to hear.”
Because the stock market often looks ahead 6-9 months, it’s not unusual for stock indexes to be ahead of economic indicators, when the economy is improving or worsening. Right now, stock investors may be anticipating a stronger economy and better earnings next year.
Among Thursday’s stock index records: The S&P 500 index rose 21.14 points, or 1.3 percent, to 1,706.87. The Dow rose 128.48 points, or 0.8 percent, to 15,628.02. The Russell 2000 index of small-company stocks rose 14.62 points, or 1.4 percent, to 1,059.88.
The S&P is now up 19.7 percent for the year, the Dow 19.3 percent and the Russell 24.8 percent.
The Nasdaq composite index rose 49.37 points, or 1.4 percent, to 3,675.74, in line with the daily gains of other indexes but still far short of its record. The Nasdaq, which is heavily weighted with technology stocks, briefly veered above 5,000 points in March 2000, just before the Internet bubble burst.
Investors said Thursday that the S&P’s crossing over 1,700 points might give consumers a psychological boost, but they were hardly crowing about a new era in stocks. Turns out it’s quite common for indexes to hit records. Since 1950, the S&P has hit a high about 7 percent of the time, or an average of about every 15 days, Courtney said. The S&P’s last record close was just eight trading days earlier, on July 22.
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