CORRECTED-US STOCKS-Dow, S&P 500 end at new highs after data, stimulus in place

Thu Aug 1, 2013 4:42pm EDT

(Corrects first paragraph to say manufacturing, not service growth)

* Initial jobless claims fall more than expected

* All 10 S&P 500 sectors higher; banks among leaders

* Pioneer Natural Resources jumps after results

* Indexes up: Dow 0.8 pct, S&P 1.3 pct, Nasdaq 1.4 pct

By Caroline Valetkevitch

NEW YORK, Aug 1 (Reuters) - The Dow and S&P 500 ended at record highs on Thursday, with the S&P 500 rising above 1,700 after strong data on manufacturing-sector growth and as central banks said they would keep monetary stimulus in place.

Stocks were broadly higher, with all 10 S&P 500 sectors in the black, though growth-sensitive financials, industrials and consumer discretionary shares registered the biggest gains. The Dow transportation average rose 3.2 percent, also closing at a new high.

Google shares, up 1.9 percent at $904.22, and Apple , up 0.9 percent at $456.67, were among companies giving the S&P 500 its biggest boost, along with financials. JPMorgan Chase shares gained 1.5 percent to $56.54 while Bank of America was up 2.4 percent at $14.95.

Data on weekly U.S. initial jobless claims and national manufacturing came in better than expected. The Institute for Supply Management said its index of national factory activity for July rose to its highest level since June 2011.

"The talk we've been hearing that the second half is going to be better than the first. We saw some follow-through on that. The ISM showing expansion in a lot of different areas is one of the main reasons why Wall Street (was) rallying today," said Brian Amidei, managing director at HighTower Advisors in Palm Desert, California.

The benchmark S&P rose to an intraday high of 1,707.85, surpassing 1,700 early in the session after coming close but failing to break above that level on Wednesday.

Global central banks remained accommodative on Thursday, with European Central Bank President Mario Draghi reiterating the ECB's rates will remain at their present level or lower for an "extended period."

On Wednesday, the Federal Reserve, in its latest policy statement, gave no hint that a reduction in the pace of its bond-buying program was imminent, as the economy continues to recover but is still in need of support.

The Dow Jones industrial average was up 128.48 points, or 0.83 percent, at 15,628.02, a record close. It also hit a new intraday high of 15,650.69. The Standard & Poor's 500 Index was up 21.14 points, or 1.25 percent, at 1,706.87, also a new record.

The Nasdaq Composite Index was up 49.37 points, or 1.36 percent, at 3,675.74. The index hit a fresh 13-year high.

The drop in initial claims, coupled with Wednesday's better-than-expected ADP employment report, bodes well for July payrolls data on Friday.

Yelp Inc surged 23.2 percent to $51.50 after the consumer reviews website posted a smaller-than-expected quarterly loss and forecast third-quarter revenue above analysts' expectations.

Pioneer Natural Resources was the S&P 500's biggest percentage gainer after reporting second-quarter results. The company's shares jumped 12.5 percent to $174.15, after hitting an all-time high of $180.99 earlier in the session.

On the downside, Exxon Mobil Corp dipped 1.1 percent to $92.73, the biggest drag on the Dow and the S&P 500, after reporting a sharp drop in quarterly profit on lower oil and gas output production and weaker earnings from its refining business. (Editing by Chris Reese, Nick Zieminski and Dan Grebler)

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Comments (1)
jefferysikes wrote:
With Bernanke leaving his post in Jan of 2014, this stimulus $85b/mo and its effects on the markets will be short lived. One thing is for certain however, a marked re-inflated by $1.02 tn in stimulus per year, is bound for a correction once that stimulus is no longer being provided. Investors know this and are simply figuring how long they can stay in the game and make maximum returns before the inevitable decline occurs.

Those with retirement accounts (401k’s and the like) will be the ones who will feel the brunt of the losses in 2014 as the market corrects due to the loss of stimulus. In this dicey game of economic control, the worst that could occur is that Bernanke’s replacement would result to raising interest rates at the wrong time and too rapidly, as there is a tipping point towards hyperinflation which cannot be avoided once crossed.

The third factor which is being currently ignored is the loss of OPEC oil transactions which will come when the Middle East oil business transfers to Iranian/Russian control, which is the game being played out now in the Middle East. Loss of OPEC transactions will seriously devalue the US dollar, exacerbating any interest rates increased by the FED.

Finally we have the debt increase for the Federal Government which will come up for discussion again in Q4 2013, just prior to Mr Bernanke’s exit. All in all its going to be a very dicey ride in 2014 and beyond for US investors. Folks should be on their toes in Q4 and watching their investments diligently. Consideration needs to be given to exit plans which will provide the least foreseeable impact, should the assembly of coming events prove to be material.

Aug 02, 2013 10:28am EDT  --  Report as abuse
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