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Another milestone: S&P closes above 2,000
August 27, 2014, 05:00 AM By Alex Veiga The Associated

It was a big round-number day for the stock market.

The Standard & Poor’s 500 index closed a hair above 2,000 points Tuesday, 16 years after it finished above 1,000 for the first time.

The move extended the stock index’s record-shattering run this year. The latest milestone comes as investors see new signs that the economy is strengthening, a driver of stronger company earnings.

“There’s perhaps a small psychological boost when you get over such a significant price level,” said Cameron Hinds, regional chief investment officer at Wells Fargo Private Bank.

U.S. stocks, in the midst of a five-year rally, have surged in the final weeks of the summer after dipping earlier this month on concerns about geopolitical tensions in Ukraine and the Middle East.

U.S. stock futures pointed to a higher opening in premarket trading Tuesday. That trend held as investors began to digest the latest positive economic news.

The Conference Board said Tuesday that its consumer confidence index rose this month to the highest point in nearly seven years. A separate report showed that orders of durable manufactured goods surged by a record 22.6 percent in July, thanks to a jump in aircraft sales. A third report showed U.S. home prices rose in June, although at a slower pace.

Stocks opened slightly higher and remained up the rest of the day.

The S&P 500 ended up 2.10 points, or 0.1 percent, to end at 2,000.02. Seven of the 10 sectors in the index rose, led by energy stocks. The Dow Jones industrial average rose 29.83 points, or 0.2 percent, to 17,106.70. The Nasdaq composite gained 13.29 points, or 0.3 percent, to 4,570.64.

The Dow is 32 points shy of its own record closing high set July 16. The Nasdaq is still well below its dot-com era record.

Major U.S. indexes are riding a three-week streak of weekly gains and are up for the year.

The S&P 500 index, a widely followed barometer of the stock market, has closed at a new high 30 times this year. By this time last year, it had done so 25 times.

The string of record highs this year isn’t unusual when a market is recovering from a downturn, said Kate Warne, an investment strategist at Edward Jones.

In the past, once stocks have hit an all-time high after a downturn, they have continued to rise for about two years, on average, she said. The first time the S&P 500 hit a high after the financial crisis was March 2013. So this year’s run is still within the average range.

“Markets don’t climb sharply. They tend to climb slowly, and that’s probably good news for a continued climb in the future,” Warne said.

The Dow also has put up some big numbers this year, notching 15 new closing highs. That trails the 30 it racked up by this time a year ago.

While the market is setting records, many experts believe stocks remain fairly valued, though not cheap.

The S&P 500 is trading around 16 times the earnings companies in the index are expected to make over the next 12 months. The historical average on that measure is about 15 times.

“That says stocks are no longer cheap, but we also don’t think they’re expensive,” Warne said. “Historically, when the price-earnings ratio has been in that range, returns over the next year have been around 7 percent. That’s not bad.”

The yield on the 10-year Treasury note rose to 2.39 percent. U.S. crude for October delivery rose 51 cents to $93.86 a barrel. In metals trading, gold rose $6.30 to $1,285.20 an ounce, silver rose three cents to $19.39 an ounce and copper fell three cents to $3.19 a pound.

Among the stocks making big moves Tuesday:

— Amazon rose 2.3 percent after saying that it would buy video streaming company Twitch for $970 million. The stock climbed $7.81 to $341.83.

— Best Buy fell $2.19, or 6.8 percent, to $29.80 after the electronics retailer reported that its fiscal second-quarter net income plunged 45 percent as sales weakened.

— Orbitz fell 4.6 percent after American Airlines and US Airways disclosed they are pulling flight listings from the site because they have not been able to reach agreement on a long-term contract with the travel booking website operator. Orbitz shed 39 cents to $8.04.

 

 

Tags: percent, after, stocks, index, stock, record,


Other stories from today:

Survey: Fed’s outlook correct but not solution
Study shows social media users shying away from opinions
Another milestone: S&P closes above 2,000
 

 
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