S&P breaks milestone level, Dow sets record high on encouraging data

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S&P breaks milestone level, Dow sets record high on encouraging data

(Xinhua) 08:37, August 02, 2013

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U.S. stocks soared on Thursday, with the S&P 500 crossing the landmark level of 1,700 points for the first time, boosted by a batch of upbeat economic data and Federal Reserve reassurance after a two-day policy meeting.

The S&P 500 ended at near session high, leaping 21.14 points, or 1.25 percent, to 1,706.87 points. The blue-chip Dow Jones Industrial Average also set a record high, surging 128.48 points, or 0.83 percent, to 15,628.02 points. The tech-heavy Nasdaq Composite Index jumped 49.37 points, or 1.36 percent, to a fresh 13-year high of 3,675.74 points.

"I think a lot of factors have come into play for the sharp short-term run-up," Gregory J. Keating, managing director at James E. Coffey Securities Inc told Xinhua on Thursday, explaining why it took just less than 3 months for the S&P 500 rising to 1,700 points from 1,600 points.

"In particular, data remains strong for jobs and the housing sector. However, the economy has not improved markedly which we were reminded of yesterday with the first reading of the Q2 GDP and the downwardly revised Q1 GDP data. That mixture I believe tells the market that the Fed will continue on with its accommodative policies for the near term which continues to be bullish for the market," he said.

On Wednesday, the Fed announced it would continue its current monetary stimulus to bolster the slow economic growth and job creation, which was widely within market expectations and reassured investors.

The central bank slightly downgraded its view of the U.S. economy, saying economic activity was expanding at a "modest" pace. The downgrade from "moderate" in its June meeting statement fueled investors' expectations that the Fed will not end its monetary stimulus any time soon.

Economic data came in better than expected, underpinning the stock rally.

In the week ending July 27, the advance figure for seasonally adjusted initial jobless benefits claims decreased 19,000 to 326, 000, the lowest level in five and a half years, while the four- week moving average dropped 4,500 to 341,250, the Labor Department reported on Thursday.

In addition, U.S. manufacturing purchasing managers' index (PMI) registered 55.4 in July, the highest level since June 2011, according to the Institute for Supply Management, a supply management institute.

Upbeat Chinese manufacturing data also helped to add some momentum to the market's rally. China's PMI for the manufacturing sector rose slightly to 50.3 percent in July from 50.1 in June, official data revealed on Thursday.

The three major stock indices logged their best July performance since 2010 on Wednesday, with the Dow advancing 4 percent, the S&P 500 up 4.9 percent and the Nasdaq up 6.6 percent in the past month.

All major S&P 500 sectors closed in green territory, with financials leading the gains.

The CBOE Volatility Index, widely considered as a fear gauge of the market, decreased 3.79 percent to end at 12.94.

In other markets, oil prices surged on Thursday as economic data around the globe added optimism to economic growth. Light, sweet crude for September delivery went up 2.86 dollars to settle at 107.89 dollars a barrel on the New York Mercantile Exchange. While Brent for September delivery soared 1.84 dollars to close at 109.54 dollars a barrel.

Gold future for December delivery on the COMEX division of the New York Mercantile Exchange lost 1.8 dollars to settle at 1,311.2 dollars per ounce on a strengthening dollar on Thursday.

The U.S. dollar rebounded against major currencies on Thursday as a string of U.S. economic data outperformed expectations. In late New York trading, the euro fell to 1.3215 dollars from 1.3333 dollars of the previous session and the dollar bought 99.49 Japanese yen, higher than 97.73 yen of the previous session.