The Dow closed above 13,000 for the first time since May 2008 on Tuesday and the S&P 500 also hit a milestone, as buoyant US consumer confidence data and a sharp drop in oil prices nudged the nearly five-month rally forward.
The S&P 500 closed above 1,370, its May 2011 intraday high, a move that could invite momentum buying as money managers chase performance, though low volumes lately have raised concerns about the rally’s longevity.
“I don’t see anything technically favouring a downturn right now,” said Chris Burba, short-term market technician at Standard & Poor’s in New York.
“No doubt (the market) has been overbought since the beginning of February, but in a powerful uptrend, price will continue higher for some time amid overbought conditions.”
Technology shares ranked among the best performers, and the Nasdaq was trading at its highest since 2000. Micron Technology Inc shot up 3.7 per cent to US$8.88 after Intel Corp said it will sell its stake in two wafer factories to Micron and buy chips from the company.
Intel advanced 1.3 per cent to US$27.24. The PHLX semiconductor index .SOX rose 1.6 per cent.
The Dow Jones industrial average gained 23.61 points, or 0.18 per cent, to close at 13,005.12. The Standard & Poor’s 500 Index rose 4.59 points, or 0.34 per cent, to end at 1,372.18. The Nasdaq Composite Index climbed 20.60 points, or 0.69 per cent, to finish at 2,986.76.
The S&P 500 is up about 9 per cent since the start of the year, largely because of data showing stronger momentum in the economy and signs of progress in managing the Eurozone’s debt crisis, including a debt deal for Greece.
Low volumes overshadowed the gains, however. With just one trading day left in February, daily volume on the New York Stock Exchange, NYSE Amex and Nasdaq has averaged 6.89 billion shares. In February 2011, the daily average volume was 7.81 billion.
Tuesday’s volume was about 6.4 billion shares on the NYSE, NYSE Amex and Nasdaq.
Consumer confidence in the world’s largest economy jumped to a one-year high in February, according to a report from The Conference Board, a private business research group. This indicator is noted because consumer spending accounts for more than two-thirds of US economic activity.
The drop in oil prices from recent highs also relieved worries about the outlook for consumer spending. Brent crude oil futures fell more than US$2 to settle at US$121.55 a barrel.
Some of the economic optimism was tempered by a government report showing orders for US durable goods in January had the biggest fall in three years. Durable goods, which are generally meant to last three years or longer, range from big-ticket items like aircraft down to consumer goods like refrigerators and even toasters.
Retailers got a lift from the earnings of Office Depot Inc, which surged 18.9 per cent to US$3.59, and AutoZone Inc, which rose 2.9 per cent to US$376.41.
Fourth-quarter earnings have been less impressive than in recent quarters, however, with 63 per cent of companies beating analysts’ expectations, below the average 70 per cent beat rate in the last four quarters. Results are in so far for 472 of the S&P 500 components.
Advancing stocks outpaced decliners on the NYSE by about 15 to 14, while on the Nasdaq, decliners beat advancers by about 13 to 12.