S&P; Hits 4-Year High as Stocks End Up Week
The blue-chip Standard & Poor’s 500 index joined the Nasdaq composite at a new four-year high on Friday, as stocks closed out a fourth-straight winning week.
But Treasury bond yields rose for the first time since Monday after European Central Bank President Jean-Claude Trichet signaled that the bank was preparing to raise interest rates.
On Wall Street, the market closed broadly higher amid a better-than-expected earnings report from Hewlett-Packard, a rebound in battered shares of General Motors and a dividend boost from General Electric.
The pickup in blue chips lifted the S&P; 500 index 5.47 points, or 0.4%, to 1,248.27. It was the highest close since June 2001 and eclipsed the previous four-year high of 1,245.04 set on Aug. 3.
The technology-dominated Nasdaq composite index rose 6.61 points, or 0.3%, to 2,227.07, also the highest since June 2001. The Nasdaq had topped its August peak on Thursday.
The Dow Jones industrial average hit an eight-month high, gaining 46.11 points, or 0.4%, to 10,766.33.
Winners topped losers by about 3 to 2 on the New York Stock Exchange and on Nasdaq.
After slumping early in October, key indexes have risen for four straight weeks as oil prices have pulled back and as economic data have indicated that growth is continuing.
“The planets are lining up for the U.S. stock market,” said Brian Stine, investment strategist at Allegiant Asset Management in Cleveland.
Near-term crude oil futures slipped again on Friday, off 20 cents to $56.14 a barrel, the lowest in five months. Oil dropped $1.39 for the week.
For the week, the Dow added 0.8%, the S&P; 500 rose 1.1% and the Nasdaq gained 1.1%.
Falling bond yields have helped to stoke optimism about stocks in the last two weeks. Some economists believe the Federal Reserve is nearly done tightening credit, with its key short-term rate at 4%.
But the prospect of higher European interest rates could put renewed upward pressure on U.S. bond yields.
The European Central Bank’s Trichet said in a speech Friday that the bank was ready “to moderately augment the present level of interest rates” to fight inflation pressures. Analysts said the comments were the clearest sign yet that the ECB soon will increase its benchmark interest rate from a six-decade low of 2%.
The news drove European bond yields up sharply, and help push up the yield on the 10-year U.S. Treasury note to 4.49%, up from 4.46% Thursday though down from 4.54% a week earlier.
Still, the strength of the stock market’s advance in recent weeks has left many analysts optimistic that Wall Street has the momentum to keep going.
“Stocks are up 5% or 6% since their October lows, and the market has broadened considerably -- instead of just energy, most of the sectors are performing,” said Susan Malley, chief investment officer at Malley Associates Capital Management.
Among the day’s highlights:
* In the Dow, HP climbed 40 cents to $29.40 on its earnings report. GM jumped $1.42 to $24.05 after its chief executive denied that the auto giant might seek bankruptcy protection. GE surged $1.09 to $35.75 after saying it would sell most of its insurance unit and sharply raise its dividend and stock buyback plan.
* Transportation stocks continued to climb, pushing the Dow transport index up 58.30 points, or 1.4%, to a record high of 4,140.69. Trucking firm Yellow gained 86 cents to $48.98 and FedEx jumped $2.06 to $97.80.
* In the tech sector, Google pulled back from its record high on Thursday, falling $3.24 to $400.21. But Microsoft edged up 10 cents to $28.07, its first close above $28 in more than a year.
* Walt Disney sank 79 cents to $25.20 after posting late Thursday a 27% drop in profit.
Retailer Gap also slid after its disappointing profit report. The stock tumbled $1.45 to $17.06.
* European stock markets ended mostly higher but their gains were cut by Trichet’s comments. Germany’s DAX index was up 1.2% at its high for the session, but closed up 0.5%.
* The S&P; mid-cap stock index hit a second consecutive record high, adding 0.3% to 728.90. Blue chips have a long way to go to catch up with mid-sized stocks: The S&P; mid-cap is up 9.9% this year, while the S&P; 500 is up 3%. The Dow is down 0.2%.
