Indexes Hit Highs on Upbeat Reports
The Nasdaq composite index had its first close above 1,900 in 18 months and the Dow Jones industrials and Standard & Poor’s 500 index reached new 15-month highs Thursday as stocks surged on encouraging jobs data and a largely upbeat estimate of future economic activity.
Analysts said the advance was yet another indication of the market’s improving mood, but they also cautioned that the approach of earnings season could make it difficult for Wall Street to notch more significant gains.
The technology-laced Nasdaq closed up 26.45 points, or 1.4%, at 1,909.55. Nasdaq, the most battered of the market’s major indexes during Wall Street’s three-year slump, last closed higher on March 11, 2002, when it stood at 1,929.49.
The Dow advanced 113.48 points, or 1.2%, to 9,659.13, its first close above 9,600 since June 18, 2002. The S&P; 500 rose 13.61 points, or 1.3%, to 1,039.58, its best finish since June 5, 2002.
Advancing issues outnumbered decliners by 2 to 1 on the New York Stock Exchange and by 5 to 3 on Nasdaq. Volume was moderate.
Investors were cheered by news that the index of leading economic indicators, a closely watched gauge of future economic activity, rose 0.4% in August to 113.3. The figure was in line with analysts’ expectations, and followed a revised 0.7% increase in July, but the assessment by the Conference Board also showed the current business climate had stalled.
Wall Street also was pleased by a Labor Department report that new claims for jobless benefits fell by a seasonally adjusted 29,000 to 399,000 for the workweek ended Saturday. It was the lowest level of claims since the week ended Aug. 23, and marked the first time since then that claims dipped below 400,000.
“We’ve got some decent economic data,” said Tim Smalls, a trader at SG Cowen Securities. “The jobless claims were a little better than expected and the leading indicators were right in line with expectations. That’s benign enough for the market to move higher.”
Stocks have been gradually trending up for months now, with the Dow, Nasdaq and S&P; regularly making new highs. Subodh Kumar, chief investment strategist for CIBC World Markets, said the moves suggest the market is becoming more resilient, but third-quarter earnings reports, which are due next month, will be key in whether the upward trend continues.
“The market is expecting earnings to meet [analysts’] consensus,” Kumar said. “If earnings exceed expectations, that could send prices higher. I think that if the S&P; 500 during this earnings season were to cross up to the 1,075 level, that would be too much ahead. And there could be the potential for pullback.”
News that NYSE Chairman Richard Grasso had resigned amid criticism of his $140-million pay package had little, if any, effect since the departure had nothing to do with stocks that are traded on the NYSE. Analysts did say, though, that Wall Street is interested in who succeeds Grasso and what regulatory changes that might bring.
In other trading, oil futures rose for the first time in six sessions, gaining 14 cents to $27.17 a barrel in New York trading.
In other highlights:
* German pharmaceutical maker Bayer surged $1.33 to $23.63 on news a federal judge had denied class-action status to several thousand lawsuits against the company regarding its anti-cholesterol drug Baycol.
* Citigroup was up $1.71 at $46.65 after Merrill Lynch’s decision to reinstate coverage of the stock with a “buy” rating.
* Jessica Bibliowicz, chief executive of National Financial Partners, rang the opening bell on her company’s first day of trading. Bibliowicz is the daughter of Citigroup head Sanford Weill, who also attended the ringing of the bell. National Financial closed at $26.25, up from its offering price of $23.
* The market had a mixed reaction to news of tentative contract agreements between autoworkers and GM and Delphi. GM rose 27 cents to $41.96, while Delphi lost 4 cents to $9.62.
