Dow, S&P close at record highs as Wall Street rallies

NEW YORK Wed Apr 10, 2013 7:58pm EDT

1 of 2. Traders work on the floor at the New York Stock Exchange, April 10, 2013.

Credit: Reuters/Brendan McDermid

NEW YORK (Reuters) - Stocks climbed 1 percent on Wednesday, with both the Dow and S&P 500 ending at historic highs as cyclical shares led the way higher for a second straight day.

The S&P 500 finally joined the new all-time intraday high club, surging past a record set on October 11, 2007. The index has struggled to breach the level of 1,576.09 for the past several weeks, but broke above it on Wednesday to rise as high as 1,589.07. The Dow also hit another intraday milestone, rising as high as 14,826.66.

"The path of least resistance for the market remains higher, and despite some mixed economic data, investors are concluding that stocks remain a better place to be than risk-free assets," said Jim McDonald, chief investment strategist at Chicago-based Northern Trust Global Investments, which has about $760 billion in assets under management.

Gains were broad, with all but two of the S&P 500's 10 primary sectors up more than 1 percent. More than three-fourths of stocks traded on the Nasdaq ended higher, while 73 percent of New York Stock Exchange-listed shares did.

In another encouraging sign, volume was higher than it has been recently, with about 6.24 billion shares changing hands on the New York Stock Exchange, the Nasdaq and NYSE MKT. However, volume remained below the daily average so far this year of about 6.36 billion shares.

With the day's gains, major indexes are up about 10 percent for the year, but many investors viewed the strength in cyclicals - groups closely tied to the pace of economic growth - as a sign that the rally still has staying power. The Dow Jones Transportation Average .DJT, viewed as a leading indicator for the broader market, rose 1.8 percent.

Tech was the day's strongest group, with the S&P technology sector index .SPLRCT up 1.8 percent. The group was lifted by strong results at Adtran Inc (ADTN.O), which jumped 14 percent to $22.46 and boosted the shares of its peer companies. JDS Uniphase Corp (JDSU.O) added 4.9 percent to $13.99 while Juniper Networks Inc (JNPR.N) rose 4.7 percent to $18.84.

The sector also got a boost from Facebook Inc (FB.O), which jumped 3.7 percent to $27.57.

The Dow Jones industrial average .DJI jumped 128.78 points, or 0.88 percent, to 14,802.24 at the close. The Standard & Poor's 500 Index .SPX climbed 19.12 points, or 1.22 percent, to 1,587.73. The Nasdaq Composite Index .IXIC shot up 59.40 points, or 1.83 percent, to close at 3,297.25.

The day marked the best session for both the Dow and the S&P 500 since February 27, and the best for the Nasdaq since January 2. The Nasdaq climbed to a session high of 3,299.15, its highest since November 2000.

"After we broke above the high, we saw momentum accelerate as investors saw it as a release of resistance," said Katie Stockton, chief market technician at MKM Partners in Greenwich, Connecticut. "By definition, there is no more resistance for the S&P now that we're at new highs."

The CBOE Volatility index .VIX, a measure of investor anxiety, fell 3.7 percent.

Stockton added that if the S&P 500 held above its old high, "the next target would be 1,780."

The Federal Reserve unexpectedly released the minutes from its most recent policy-setting meeting five hours early. The minutes showed a few policymakers expected to taper the pace of asset purchases by mid-year and end them later this year, while several others expected to slow the pace a bit later and halt the quantitative easing program by year-end.

Accommodative monetary policy from the Fed has been credited with helping to boost equity prices, and uncertainty surrounding the minutes briefly hit indexes in the premarket session, though they subsequently recovered.

"The only way quantitative easing will be tapered off is if the labor market shows noticeable improvement, and the most recent data doesn't show that," said Northern Trust's McDonald, referring to the March payroll report, which fell sharply short of expectations.

"QE will only be taken away when we're in a self-sustaining recovery. We're not there yet, which points to the Fed continuing to stimulate the economy."

Among the 5 percent of S&P 500 companies that have reported results so far, almost three-quarters have topped expectations, according to Thomson Reuters data.

But quarterly profits are expected to grow just 1.5 percent from a year ago, down from a January estimate of 4.3 percent. The lowered expectations could make it easier for companies to beat analysts' estimates and propel the market further.

Family Dollar Stores (FDO.N) reported weaker-than-expected earnings, but rebounded off earlier declines to rise 1.1 percent to $60.44.

Hospital operator Health Management Associates Inc HMA.N cut its outlook for 2013 earnings and revenue, citing weak patient-admission figures in the first quarter of the year. The stock plummeted 16.4 percent to $10.53.

(Editing by Jan Paschal)

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Comments (5)
cammanchee wrote:
That is just funny. For the last few quarters it has been the same cycle. They come out with these forcasts at the very beginning of the quarter, only to reduce them just before quarterly results reporting season is starting. Example: At the start of the 4th quarter, profits were expected to increase by 9.9 percent, only to be reduced all the way down to I believe 1.6 – 1.7 percent. Then when all these companies report, the number turns out to be 6.3 percent, and all the stock buyers/analysts are just happy as can be because “miraculously” the numbers were amazing and everything is “much better than expected”. They report “Oh, 70 percent of companies beat the estimates and and everything is just going tremendous”, when if fact if they would have went with the original estimates, very few companies would have been close to meeting “the numbers”.

If they really want to show how great everything is supposed to be doing, then they should not re-adjust their earnings estimates so substantially just a couple of weeks before the reporting season starts. All they are doing is fudging the numbers to make everything seem way better than it is, only to sucker all the “dumb money” into stocks, which the numbers have shown, that even though the stock market is at a record level that the very rich are the ones benefiting the most. Let’s ban the ability of the analysts to reduce their estimates from the original numbers given at the start of the quarter and just see how well these companies are really doing. dropping your estimates by 60, 70, 80, 90 percent by the time the earnings season starts just isn’t a true gauge at all. Unless you are a J.C. Penny’s run company, the numbers they reduce them too are virtually impossible to not beat.

Apr 10, 2013 3:56pm EDT  --  Report as abuse
Harry079 wrote:
When the Fed stops the Bankers will fall and down will come Wall Street Hedge Funds and all.

Apr 10, 2013 4:25pm EDT  --  Report as abuse
cammanchee wrote:
So then you get to this quarter. Original profit estimates of 4.3 percent, only to be reduced all the way down to 1.5 percent. Sorry, that is about a 61 – 62 percent decrease from the original number, and they are already making a big deal that “5 percent of companies that have already reported are beating the numbers”. Well no fooling. Not to tough to beat the numbers when they got reduced that much. Then to top it off, all these investors are bragging about about great these companies are doing and pushing stock prices up in the process.

Apr 10, 2013 5:56pm EDT  --  Report as abuse
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