U.S. stock market hit a fresh 17-month high Wednesday, with the Dow average registering its seventh straight advance, as a tame wholesale inflation data and hopes that borrowing costs would remain at historic lows for some time gave investors a sense of contentment.
Unlike on earlier occasions, stocks have risen modestly but fairly steadily this time. In the last five weeks, the blue-chip Dow average has gained nearly 825 points and the advances have been negligible or fairly small. The mid-January correction that began on concerns about European nations’ debt problems has already been reverted and all the three major indexes are at fresh 2010 highs.
Stock futures are trading slightly higher this morning after reports on initial jobless claims and inflation have come in line with expectations. Nevertheless, there are fresh concerns about Greece’s debt problems and that is likely to weigh on sentiments.
Yesterday, the DJIA gained 48 points, or 0.5%, to 10,734, its highest close in 17 months. The tech-heavy NASDAQ rose 0.5% to close at 2,389, its highest close since August 2008. The S&P500 advanced 0.6% to finish at 1,166, its highest level since November 30, 2008. The Vix volatility measure plunged 4.4% to 16.91, its first move below 17 since May, 2008. On the New York Stock Exchange, advancing shares beat those that declined by a 7 to 3 margin on a modest volume of 1.02 billion shares. The US dollar was off 0.1% against a basket of currencies to 79.63.
Sentiments got a further boost after the Senate gave final approval to a $17.6 billion jobs bill with tax incentives and highway project funding. The Bank of Japan doubled its lending program to $222 billion to help boost credit growth.
Among the thirty DJIA components, twenty closed in the green, led by a 4.8% jump in Alcoa (NYSE:AA) shares. Shares in Alcoa jumped on reports a manufacturing dispute in Italy has been resolved. A Deutsche Bank (NYSE:DB) upgrade to “buy” sent DuPont (NYSE:DD) up 1.5%. Crude prices advanced 1.2% to $82.93, sending ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX) up 1.2% and 0.9%, respectively. As expected, OPEC held output at current levels. Intel (NASDAQ:INTC) continued to build on recent momentum, rising 1.1%. Fed’s ongoing easy-money policy continued to favor financials, with Bank of America (NYSE:BAC) and JP Morgan (NYSE:JPM) rising 1.4% and 1.3%, respectively.
All ten S&P500 industry sectors advanced yesterday, led by financials (+1.1%), oil and gas (+1.0%), consumer goods (+0.7%), telecommunications (+0.7%), basic materials (+0.6%), industrials (+0.5%), technology (+0.4%), utilities (+0.3%), consumer services (+0.3%), and health care (0.1%).
Meanwhile, Greece Prime Minister George Papandreou said Greece would knock on International Monetary Fund’s doors if the EU fails to provide a rescue package. Papandreou said he didn’t see the IMF asking for tougher measures. The news was enough to sour sentiment. The Nikkei average fell 1%, and China’s Shanghai Composite edged 0.1% lower. The Hang Seng closed down 0.3%.