US stocks rallied yesterday, led by the tech, industrial and materials sectors, driving the Dow and the S&P 500 to 18-month highs.
Signs of improved demand in the semiconductor industry and a broker’s positive commentary on Caterpillar lifted blue chips, while tech bellwethers Apple and Cisco hit 52-week highs, indicating increased optimism among investors. Kraft, a Dow component, also hit a 52-week high.
Caterpillar led the Dow industrials higher after Wells Fargo raised price targets on the company's stock on expectations for strong longer-term growth. The stock climbed 4.1 per cent to $62.41.
“Industrials have been among the best performers so far this year, so they’re getting a lot of the momentum money,” said John Massey, portfolio manager at SunAmerica Asset Management in Jersey City, New Jersey. “I think it’s clear we're on an upward path.”
The S&P industrials sector was the S&P 500’s best-performing sector, with the S&P materials sector also lending support. Both indexes ended slightly above 1 per cent.
Semiconductor stocks were also strong performers, lifting the Nasdaq. The Philadelphia semiconductor index rose 2.3 per cent, while Intel gained 1.9 per cent to $22.67 Integrated Silicon Solution surged 14.6 per cent to $8.58 a day after it raised its second-quarter revenue and earnings outlook.
According to Stifel Nicolaus, which cited a media report, Taiwan Semiconductor Manufacturing forecast full-year revenue growth of 22 per cent, compared with a previous expectation of 18 per cent. The company’s US-listed stock rose 0.9 per cent to $10.27 on the New York Stock Exchange.
The Dow Jones industrial average rose 102.94 points, or 0.95 per cent, to 10,888.83. The Standard & Poor’s 500 Index gained 8.36 points, or 0.72 per cent, to 1,174.17. The Nasdaq Composite Index shot up 19.84 points, or 0.83 per cent, to 2,415.24.
The Nasdaq Composite Index ended at its highest level since 18 August, 2008, or about a month before Lehman Brothers collapsed during the credit crisis. The Dow chalked up its 10th day of gains.