Back-to-back gains for the markets drove S&P 500 to another record high yesterday, the first time the index achieved such a feat this year. The gains came on the back of encouraging earnings numbers from the Bank of America and positive manufacturing data. Also, gains in Apple’s stock and a positive Fed’s Beige Book outlook, noting a moderate pace of economic growth improved investor sentiment.
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The Dow Jones Industrial Average managed its second-straight triple-digit gain as it soared little over 108 points, or 0.7%, to 16,481.94. The Standard & Poor 500 (S&P 500) jumped 0.5% to close at a record high of 1,848.38. The tech-laden Nasdaq Composite Index gained 0.8% to finish Wednesday’s trading session at 4,214.88. The fear-gauge CBOE Volatility Index (VIX) dropped 10.5% to settle at 12.28. Composite volume for the day was 3.8 billion shares. For two stocks that advanced on the New York Stock Exchange, one stock ended in the red.
Three-straight days of losses that ushered in 2014 had ensured S&P 500 of the worst start to a year since 2005. A fourth consecutive decline would have ensured the worst start to a year since 1978. In fact, until yesterday, the S&P 500 was trading 0.5% lower for the year. However, the second-consecutive day of gains for the benchmark has eroded its yearly losses now and also helped it jump to its all-time high. The index narrowly beat its previous record high of 1,848.36, which was scored on the final day of last year. In 2013, S&P 500 had hit new highs several times through the year and yesterday’s session saw S&P 500 hit its highest level for the first time this year.
The record as well as the bullish mood, depended a lot on the banking behemoth Bank of America Corporation’s (NYSE:BAC) encouraging fourth-quarter results. Bank of America reported a positive earnings surprise of 7.4% for the concluding quarter of 2013. The banking giant reported earnings per share of 29 cents, beating the Zacks Consensus Estimate of 27 cents.
Shares of Bank of America gained 2.3% yesterday and the Financial Select Sector SPDR (XLF) closed with decent gains of 1.2%. Bank of America’s positive results follows encouraging results from JPMorgan Chase & Co. (NYSE:JPM) and Wells Fargo & Co (NYSE:WFC) the previous. These two shares gained 3.0% and 1.8%, respectively. Among other key results from this sector, Goldman Sachs Group Inc (NYSE:GS), Morgan Stanley (NYSE:MS) and Citigroup Inc (NYSE:C) are scheduled to report their performances this week. Shares of these three companies were up 1.2%, 3.6% and 1.9%, respectively.
Apart from the financial stocks, the technology sector was a big gainer yesterday and the Technology Select Sector SPDR (XLK) closed with gains of 1.2%. Much of the gains was aided by a 2.0% gain in Apple Inc. (AAPL) following comments from China Mobile Limited (NYSE:CHL) said iPhones’ advance orders have hit 1 million. Apple’s gains also helped the broader benchmarks move north. Among other tech heavyweights, International Business Machines Corporation (NYSE:IBM), Microsoft Corporation (NASDAQ:MSFT), Cisco Systems, Inc. (NASDAQ:CSCO) and Intel Corporation (NASDAQ:INTC) gained 1.0%, 2.7%, 1.7% and 0.6%, respectively.
Investors were also greeted with positive manufacturing data. The Federal Reserve Bank of New York released the monthly survey of manufacturers in New York State that noted faster pace of expansion for NY manufacturers’ business activity in recent months. The report noted that the general business conditions index had gained 10 points to touch 12.5. It reached the highest level in over a year. The new orders index was at a two-year high as it climbed 13 points to 11.0.
The U.S. Bureau of Labor Statistics reported that the seasonally adjusted Producer Price Index (PPI) for finished goods increased 0.4% in December, beating consensus estimate of 0.3% gain. This was the largest gain since June last year.
Also, the Federal Reserve’s Beige Book noted that the economy expanded at a ‘moderate pace’ from late November through end of last year. It said: “The economic outlook is positive in most Districts, with some reports citing expectations of “more of the same” and some expecting a pickup in growth”.