Wall St rises, S&P makes strong gains
The S&P 500 closed at a four-month high yesterday as a long-awaited break above a technical range and a flurry of positive corporate news increased investor optimism.
The break came a day before a Federal Reserve meeting in which the central bank is expected to renew a promise to keep its portfolio from shrinking but is not seen taking new steps to ease monetary policy.
The S&P 500 has struggled to make a sustained move above 1,130, which has been the upper end of a range that has persisted since June. Yesterday’s gains could be a shot in the arm if it sways institutional investors that September’s rally of 8.9 per cent by the benchmark S&P index has further to go.
“We’ve been waiting for this level to be penetrated, and breaching it makes it hard to be too negative right now,” said Frank Gretz, market analyst and technician at Shields & Co in New York.
IBM was among the top boosts to the Dow after it agreed to buy Netezza Corp for $1.7bn in the latest in a string of large tech deals. Shares of IBM rose 1.2 per cent to $131.78.
Volume was light with about 7.16 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year’s estimated daily average of 9.65 billion.
Recent days have seen weak to moderate volume, and traders are looking for a pick-up in trading to confirm the market has made a convincing breakout.
The Dow Jones industrial average was up 145.77 points, or 1.37 per cent, at 10,753.62.
The Standard & Poor’s 500 Index was up 17.12 points, or 1.52 per cent, at 1,142.71.
The Nasdaq Composite Index was up 40.22 points, or 1.74 per cent, at 2,355.83.
The National Bureau of Economic Research said that the longest recession since World War Two officially ended in June 2009, though that didn’t mean the economy had “returned to operating at normal capacity.”
The bureau’s announcement “is a nice shot in the arm, psychologically, since it suggests more progress than some parts of the market had allowed for,” said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland, Ohio. He added: “It suggests an opening of potential going forward.”