THE DOW and the S&P 500 rose yesterday after Bank of America and General Electric rallied on positive broker comments, but investors were cautious a day before the release of key monthly non-farm payrolls data.
US stocks have rallied over the past month as investors have become more optimistic about the economy. Job growth would bolster that view while a weak report could disappoint.
“I don’t think there is going to be a number that is too good,” said Jack Ablin, chief investment officer at Harris Private Bank. “Investors will be willing to look past the potential for higher interest rates.”
But Ablin said investors may be setting themselves up for a fall by taking too rosy a view of today’s number.
Yesterday’s small move higher pushed the Dow industrials and the S&P 500 to new 15-month highs, continuing the equity market’s slow upward trend of recent weeks.
The top performer among S&P sectors was the financials, which gained 2.1 per cent after Credit Suisse upgraded Bank of America to “outperform.” The stock, a Dow component, climbed 3.3 per cent to $16.93, while the KBW Banks index shot up 4.1 per cent.
The Dow Jones industrial average gained 33.18 points, or 0.31 per cent, to end at 10,606.86. The Standard & Poor’s 500 Index added 4.55 points, or 0.40 per cent, to 1,141.69. But the Nasdaq Composite Index slipped 1.04 points, or 0.05 per cent, to 2,300.05.
The CBOE Volatility Index hit a new 16-month intraday low at 18.70, before paring back around the closing bell at about 18.98, a drop of 1 per cent. The move down may suggest a lack of bearish hedging bets ahead of today’s jobs report. The index closed at 19.06, down 0.5 per cent.
GE shares rose 5.2 per cent to $16.25 after JP Morgan raised its price target on the stock to $22 from $20, saying investors underappreciate potential earnings recovery at the GE Capital finance unit.
A majority of retailers reported better-than-expected December sales sending the S&P retail index up 0.8 per cent.
Still, Abercrombie & Fitch sank 9.8 per cent to $32.67 after December sales fell 19 per cent, and American Eagle Outfitters slid 3.1 per cent.