By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- The S&P 500 closed at a record
high Wednesday, narrowly beating its previous peak reached on Dec.
31, as investors took upbeat manufacturing data, Bank of America
Corp. earnings, and Apple Inc.'s China deal as signs economic
growth was on solid ground.
The S&P 500 index (SPX) closed 9.5 points, or 0.5%, higher
at 1,848.38 and set a new intrday peak of 1,850.84. The benchmark
beat its previous record close reached on Dec 31 by only 0.02 point
and is now flat for the year.
The Dow Jones Industrial Average(DJI) added 108.08 points, or
0.7%, climbing to 16,481.94. The Nasdaq Composite(RIXF), the
best-performing index, rose 31.87 points, or 0.8%, to 4,214.88. The
tech-heavy index turned positive for the year after sharp gains on
Tuesday.
Follow the stock market live blog.
John Fox, director of research at Fenimore Asset Management,
says that markets have already priced in the possibility of the Fed
completing its taper by the end of the year, and that if it happens
early, it will have a minimal impact.
"The economy is improving, which means better corporate
earnings. We have created more than 2 million jobs and at 10-year
yield below 3%, markets can only go up. At current multiples,
markets will go up even if the 10-year yields rise to 3.5%, because
at a price-to-earnings ratio of 17.6, there is room for a bit more
expansion," Fox said.
Upbeat earnings results from Bank of America (BAC) underpinned
gains for the financial sector of the S&P 500, the second best
performing of the 10 after telecoms. The bank's fourth-quarter
earnings topped analysts' expectations and shares rose 2.3%. Read a
recap of the live blog of Bank of America's earnings call.
Apple Inc. (AAPL) shares rose 2% after the chairman of China
Mobile said the company's recent deal with Apple will entail broad
cooperation between the two. He also said millions of iPhones have
already been ordered by customers, signaling strong demand for the
device. Apple's Chief Executive Officer Tim Cook said he was
"incredibly optimistic" about the outcome of cooperating with the
Chinese carrier.
Stocks added to gains after the Federal Reserve released a
report, known as the Beige Book, saying the U.S. economy is
continuing to grow at a moderate pace and the economic outlook is
positive, confirming recent economic indicators.
Earlier, the Federal Reserve Bank of New York's report showed
manufacturing activity in the New York region surged in January,
far more than anticipated, after three months of weak readings.
Separately, U.S. wholesale prices rose in December for the first
time in three months, largely reflecting higher costs for gasoline
and tobacco, the U.S. Department of Labor said. The gains were
higher than economists expected.
Jeffrey Kleintop, chief market strategist at LPL Financial,
wrote in a research note that the "second-year curse" may offer a
better indication as to how the year may unfold.
"Year two of the presidential cycle has typically been a
volatile one for investors. Will the year-two curse repeat in 2014?
It may, particularly if a temporary economic soft spot develops in
the second quarter. Weak economic data readings led to 5% or more
pullbacks beginning in the spring of each of the past four years,"
Kleintop wrote.
Shares of General Motors Co. (GM.XX) fell 1.6% after the auto
maker said it sees "modest" 2014 North American market-share gains,
but it also forecast restructuring costs of $1.1 billion for this
year. GM said after the market closed Tuesday that it would pay a
dividend this March, the first since May 2008.
Aeropostale Inc. (ARO) shares rose 0.7%. The teen retailer has
reportedly reached out to at least two private-equity firms to
gauge interest in a sale, but isn't currently in negotiations,
according to Bloomberg News.
Shares of Tesla Motors Inc. (TSLA) rose 1.8%. The electric-car
company's shares surged 16% Tuesday after the company said its
fourth-quarter sales and deliveries came to "almost" 6,900, beating
its own expectations by 20%. The company also disclosed it would
recall up to 29,222 2013 Model S cars because of adapter
issues.
PetSmart Inc. (PETM) shares fell 2.4%. Joseph O'Leary, the
company's chief operating officer and president, is set to retire
this year and the company said Tuesday it won't fill the chief
operating officer position. Instead, the chief executive will take
on the additional title of president as the company reorganizes its
leadership structure.
European stocks closed at a six-year high on global growth
hopes. The dollar strengthened across the board Wednesday after
U.S. data underscored a recovery in the manufacturing sector.
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