THE Dow and S&P 500 closed at their highest levels since June 2008 yesterday and looked poised for more gains after strong earnings and signs of a surge in US manufacturing.
Data showing improved factory activity and strong results from shipping company UPS, seen as a gauge for economic activity, bolstered the growing impression among investors that a recovery was broadening.
The rising sentiment drew in additional buyers on a well-traded day as fears that Egypt’s turmoil could spread elsewhere lessened.
Volume was above last’s years daily average with 8.71bn shares traded on the NYSE, Amex, and Nasdaq amid reports of some large scale buying from institutional investors.
The Dow closed above the psychologically important 12,000 level for the first time since June 2008.
Scott Marcouiller, chief technical market strategist at Wells Fargo Advisors in St. Louis, said the biggest pullback in six months on Friday had lured investors. “There was an opportunity for that money that had missed out to jump in,” he said.
The Dow Jones industrial average gained 148.23 points, or 1.25 per cent, to 12,040.16. The Standard & Poor’s 500 Index rose 21.45 points, or 1.67 per cent, to 1,307.57. The Nasdaq Composite Index added 51.11 points, or 1.89 per cent, to 2,751.19.
The S&P 500 closed above 1,300 for the first time since August 2008.
“Risk is coming back into the market,” said David Lutz, managing director of trading, Stifel Nicolaus Capital Markets, Baltimore. “A lot of it is block volume which suggests it’s institutional.”
Pfizer shares rose 5.5 per cent to $19.22 after the Dow component’s income and revenue topped estimates. Pfizer also announced a new share-repurchase programme of up to $5bn of its common stock.
United Parcel Service rose 4.1 per cent to $74.59 after profit at the world’s largest package deliverer beat estimates and it forecast record-high earnings in 2011.
Signalling improvement in economic growth, the US manufacturing sector expanded at its fastest pace in nearly seven years in January, according to the Institute for Supply Management. The index’s employment component rose to its highest since 1973.
That chimed with other manufacturing reports released around the world yesterday.
The euro hit a 2-1/2 month high above $1.38, boosted by the solid global manufacturing data and easing concerns about public debt.