Stocks reach milestone with new high for S&P 500

Stocks closed up on Wall Street Thursday with the Standard & Poor's 500 closing at a new high. The reaction on Wall Street was muted with stock investors warning clients not to get overly excited.

|
Brendan McDermid/Reuters
A screen over the trading floor displays the final tally for the S&P 500 at the New York Stock Exchange, Thursday. The S&P 500 set a record closing high on Thursday, finishing a fifth consecutive month of gains to extend a four-year rally.

For the second time in less than a month, the stock market marched past another milepost on its long, turbulent journey back from the Great Recession, toppling another record left over from the days before government bailouts and failing investment banks.

The Standard & Poor's 500 closed at a new high Thursday, three weeks after another popular market gauge, the Dow Jones industrial average, obliterated its own closing record. The S&P capped its best quarter in a year, rising 10 percent. The Dow had its best first quarter in 15 years, climbing 11 percent.

The reaction on Wall Street was muted — more of a dull buzz than a victory cry. Investors warned clients not to get overly excited.

"Getting back to where we were is an important step," said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. But he cautioned in a note to investors: "Markets are volatile, and if you are a long-term investor you should expect declines."

The S&P 500 rose 6.34 points, or 0.41 percent, to 1,569.19, beating by four points its previous record of 1,565.15 set on Oct. 9, 2007. The index is still shy of its all-time trading high of 1,576.09.

The index has now recovered all of its losses from the recession and the financial crisis that followed. Investors who put their dividends back into the market have done even better. A $10,000 investment in the S&P back in October 2007 would be worth $11,270.

On any other day, a gain of that size would go unheralded, but not after the turmoil that began in late 2008 and persisted through a slow, sometimes stalled recovery. The milestone generated chatter at water coolers and on business news channels.

The S&P 500 is a barometer that gauges market performance. And while professional investors might scoff at using it to decide when to buy and sell, the breaking of an old record can be psychologically important.

When the S&P 500 last closed this high, it was a headier time. In the fall of 2007, the financial crisis was simmering but hadn't yet boiled over. It was an era before big bailouts and the Great Recession, back when jobs were much easier to come by and salaries seemed to go only up. Bear Stearns still existed. So did Lehman Brothers and Washington Mutual.

Investors have reason to be cautious.

The U.S. economy is stable, but growth is anemic. The European debt crisis is far from resolved. Some investors are concerned that the market's gains this year are being fueled by the Federal Reserve's easy money policy, and will disappear once the Fed reverses course.

The crisis-of-the-moment is Cyprus, the Mediterranean island country that struggled this week to get an emergency bailout from other countries. For many investors, the bailout deal was a reminder of Europe's lingering economic problems.

On Thursday, U.S. economic news was mixed.

The U.S. economy grew faster than first estimated in the fourth quarter, the government reported. But the growth, an annual rate of 0.4 percent, was still weak. The number of Americans seeking unemployment aid jumped for the second straight week. Longer-term, though, jobless claims have been declining since November. Unemployment is 7.7 percent, versus the 4.7 percent in 2007.

"If you're a bull or a bear, you could find enough news out there to convince you of your position," said Jim Lauder, CEO of Global Index Advisors in Marietta, Ga., and co-portfolio manager on Wells Fargo Advantage Dow Jones Target Date Funds.

Cyprus reopened its banks after closing them for nearly two weeks to keep depositors from making panicked withdrawals. Portugal reported that its budget deficit was widening.

Brian Singer, partner at William Blair in Chicago, said the market's gains Thursday were more about a lack of any major negative developments than the appearance of any good ones. Investors aren't necessarily convinced of the economy's health, but they've learned to live with the sicknesses.

"We are looking at a realization that Western civilization is not ending as we know it," Singer said. "Fiscal discussions in the U.S. have settled into an acceptable stalemate. The Italian elections that did not result in a government are on hold. Cyprus hasn't sunk into the Mediterranean."

Thursday also marked the end of the first quarter, since markets are closed for Good Friday. Overall, it's been a strong quarter.

The Dow climbed for the first 10 trading days of March — a record not matched in more than 16 years. In the past 10 days, though, it has wavered under the weight of Cyprus.

The Dow rose 11 percent in the first three months of the year, its best quarterly performance since the fourth quarter of 2011. Last year, it lost ground in two quarters and was up by smaller amounts — 4 percent and 8 percent — in the other two. On March 5, it beat its own all-time record of 14,164.53, which was also set on Oct. 9, 2007, and has been climbing ever since.

To be sure, the S&P 500's last record was followed by a painful downfall. By March 2009, long after the subprime mortgage market had been revealed as an unsustainable bubble and rumors were buzzing that the government might nationalize U.S. banks, the S&P had cratered from its lofty heights. It fell to its Great Recession low, 676.53, on March 9, 2009 — down 57 percent from its October 2007 pinnacle.

Now, with Thursday's gains, it has more than doubled since reaching that bottom. Including dividends, it is up more than 150 percent.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to Stocks reach milestone with new high for S&P 500
Read this article in
https://www.csmonitor.com/Business/Latest-News-Wires/2013/0328/Stocks-reach-milestone-with-new-high-for-S-P-500
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe