The Nasdaq composite index had its first close above 1,900 in 18 months today and the Dow Jones industrials and Standard & Poor’s 500 index reached new 15-month highs as US stocks surged.
Analysts said the advance was yet another indication of the market’s improving mood, but they also cautioned that the approach of the earnings reporting season could make it difficult for Wall Street to have more significant advances.
The Nasdaq closed up 26.45, or 1.4%, at 1,909.55. The Nasdaq, the most battered of the market’s major indexes during Wall Street’s three-year slump, last closed higher on March 11, 2002 when it stood at 1,929.49.
The Dow advanced 113.48, or 1.2%, to 9,659.13, its first close above 9,600 since June 18, 2002 when the average was at 9,706.12.
The S&P 500 index rose 13.61, or 1.3%, to 1,039.58, its best finish since June 5, 2002 when the index was at 1,049.90.
Today, investors were cheered by news that the Index of Leading Economic Indicators, a closely watched gauge of future economic activity, rose 0.4% in August to 113.3. The figure was in line with analysts’ expectations, and followed a revised 0.7% increase in July, but the assessment by the Conference Board also showed the current business climate had stalled.
Wall Street was also pleased by a Labour Department report that new claims for jobless benefits fell by a seasonally adjusted 29,000 to 399,000 for the work week ending September 13. It was the lowest level of claims since the week ending August 23, and marked the first time since then that claims dipped below the 400,000 mark.
“We’ve got some decent economic data,” said Tim Smalls, a trader at SG Cowen Securities. “The jobless claims were a little better than expected and the leading indicators were right in line with expectations. That’s benign enough for the market to move higher.”
Stocks have been gradually trending up for months, with the Dow, Nasdaq and S&P regularly making new highs.
Subodh Kumar, chief investment strategist for CIBC World Markets, said the moves suggested the market was becoming more resilient, but third-quarter earnings reports, which are due out next month, would be key in whether the upward trend continues.
“The market is expecting earnings to meet (analysts’) consensus,” Kumar said. “If earnings exceed expectations, that could send prices higher. I think that if the S&P 500 during this earnings season were to cross up to the 1,075 level, that would be too much ahead. And there could be the potential for pullback.”
German pharmaceutical maker Bayer surged 1.33, or 6%, to 23.63 on news that a US judge had denied class-action status to several thousand lawsuits against the company over its anti-cholesterol drug Baycol.
Citigroup Inc was up 1.71, or 3.8%, at 46.65 following Merrill Lynch’s decision to reinstate coverage of the stock with a “buy” rating.
Sun Microsystems Inc gaining 15 cents to 4.17 following news that the troubled computer and software maker would trim another 3% of its work force, or an estimated 1,080 jobs, as part of its effort to improve its performance.
News that New York Stock Exchange chairman Dick Grasso had resigned amid criticism of his 139.5 million pay package had little, if any, effect since the departure had nothing to do with stocks which are traded on the NYSE. Analysts did say, though, that Wall Street is interested in who succeeds Grasso and what regulatory changes that might bring.
Advancing issues outnumbered decliners 2 to 1 on the NYSE. Volume was moderate.
The Russell 2000 index, which tracks smaller company stocks, rose 4.36, or 0.9%, to 519.46.