Dow, S&P 500 end at record highs again

NEW YORK Tue May 13, 2014 6:45pm EDT

1 of 2. Traders work on the floor of the New York Stock Exchange May 13, 2014.

Credit: Reuters/Brendan McDermid

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NEW YORK (Reuters) - The Dow and the S&P 500 eked out record closing highs again on Tuesday, while the Nasdaq resumed its recent slide, dragged down by shares of Cisco (CSCO.O).

The S&P 500 briefly rose above 1,900 for the first time early in the session, but quickly gave back some of its gains. In contrast, the Russell 2000 .TOY index of small-cap stocks fell 1.1 percent.

"We didn't see much of a follow-through from yesterday's run-up. That started a discussion as to whether the economy was going to bounce back as strongly as some folks had been expecting," said Bucky Hellwig, senior vice president of BB&T Wealth Management in Birmingham, Alabama.

"We've eked out a gain in the broad averages but continue to see weakness in the Nasdaq and small caps so that divergence has got some investors concerned. What you see is a smaller group of stocks participating in the rally."

Homebuilders' shares gained and the common stock of mortgage finance giants Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) jumped as Federal Housing Finance Agency Director Mel Watt laid out new policies that could make it easier for many Americans to obtain mortgages. Fannie Mae jumped 7.8 percent to $4.57 while Freddie Mac advanced 6.9 percent to $4.49.

Cisco Systems Inc (CSCO.O), set to report results on Wednesday, was the biggest drag on the Nasdaq. The stock slid 1.4 percent to end at $22.86.

The Dow Jones industrial average .DJI rose 19.97 points or 0.12 percent, to 16,715.44, its third straight record closing high. The Dow also set an intraday record at 16,735.51.

The S&P 500 .SPX gained just 0.8 of a point or 0.04 percent, to 1,897.45, its second straight record closing high. The S&P 500 also advanced during the session to 1,902.17, a lifetime intraday high.

The Nasdaq Composite .IXIC dropped 13.69 points or 0.33 percent, to 4,130.165.

The drop in the Russell 2000 came a day after the index scored its biggest daily percentage gain since early March. At its session low on Friday, the index was down exactly 10 percent from the intraday record high set in early March.

The Dow Jones Transportation Average .DJT rose 0.5 percent after hitting another intraday record high, which some analysts say points to upbeat prospects for the U.S. economy.

More developments on the deal front enhanced the outlook for stocks. Keurig Green Mountain Inc (GMCR.O) was the S&P 500's biggest percentage gainer, up 7.6 percent at $119.07. The stock climbed after Coca-Cola Co (KO.N) said it will raise its stake in the company, the maker of the popular Keurig one-cup coffee brewer, to 16 percent from 10 percent.

In other deal news, DirecTV (DTV.O) shares slipped 1.2 percent to $86.08 a day after sources told Reuters that AT&T Inc (T.N) was in active talks to buy the company in a deal that could be worth close to $50 billion. AT&T's stock dropped 1 percent to $36.20 and was the biggest drag on the S&P 500.

Among homebuilders, the stock of D.R. Horton Inc (DHI.N) rose 2.2 percent to $23.07. The PHLX housing sector index .HGX gained 0.2 percent.

Data did little to change the view that the U.S. economy is poised for faster growth this quarter. Retail sales rose 0.1 percent in April, less than expected, though the March reading was revised upward.

About 5.5 billion shares changed hands on U.S. exchanges, below the 6.1 billion average for the month to date, according to data from BATS Global Markets.

(Editing by Bernadette Baum, Nick Zieminski and Jan Paschal)

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Comments (5)
Bradnaksuthin wrote:
Whenever I look at my 401 K portfolio I am reminded of how far we have come in 6 years.
6 years ago, as President Bush was preparing to turn the country over to Obama my 401K retirement had collapsed. I remember turning to my wife after looking at our Charles Schwarb statement as saying “We’ve lost half of our retirement investments”
As Bush was preparing to leave office in early 2009 I think the DOW have fallen to 8000 and the NASDAQ had plunged to 1500.
The country was in economic freefall. Banks were going out of business, housing prices were falling like a rock, hundreds of thousands of workers were being laid off every month. The US auto industry was on it’s knees begging for a bailout. The Bush administration borrowed 700 billion dollars from the taxpayers to bail out the banks..which were frozen in fear. Newscaster started using the word “2nd Great Depression”.
Back then, I thought to myself “I am actually going to live through an Economic Depression like my dad did”, “All my retirement savings for the last 30 years are going to disappear”. “We will end up having to work for the rest of our lives instead of enjoying retirement”

How different things are today…6 years later.
The worst recession in US history is over
People are going back to work
Banks are healthy and profitable again
The US auto industry is the pride of the nation
Housing prices are on the rise again
Gas prices, adjusted for inflation, are lower than they’ve ever been before
Inflation is low
Interest rates are low

And the stock market? Businesses are booming.
It’s in record territory. It has NEVER been this high
the DOW is higher than it has ever been in it’s history
the NASDAQ has tripled since the closing days of the Bush administration.

So….Now that I am actually in retirement and cashing out my retirement investments

6 years ago, with the country in economic chaos, I could not have dreamed that our country would be where it is today. It was unthinkable. Unimaginable.

Yet here we all are today….in a country that rose from the ashes of economic disaster called the GREAT AMERICAN RECESSION….to become a vibrant growing healthy economy.

in 2009 the Bush administration handed Obama handed a rotten lemon…and in 6 years he has turned it into sparkling Champagne.

May 13, 2014 9:34am EDT  --  Report as abuse
keener91 wrote:
Bradnaksuthin, I am glad you cashed out your investment and enjoying your retirement. Unfortunately, what is reflected in the market does not reflect the state of the US economy. So I am worried about the folks who are not close to retirement, who are no where near the top% income earners. What of them and their children when this house of cards collapse?

May 13, 2014 11:34am EDT  --  Report as abuse
GFY365 wrote:
Sure, it appears that way. My probelm with all this economic growth is the fact that QE3 still exists. That along with our countrys rising debt , 17.5 trillion, 61 trillion in total liabilities is a larger problem. Close down Qe3 and lets see what happens.

May 13, 2014 1:07pm EDT  --  Report as abuse
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