Investor sentiment has clearly turned. On Tuesday, that point was hammered home as the DJIA topped the old intra-day record.
The Dow Jones Industrial Average (INDU) climbed to a record, erasing losses from the financial crisis, as China vowed to maintain its growth target and investors bet central banks will continue stimulus measures.
The Dow rose 126.18 points, or 0.9 percent, to 14,254 at 4 p.m. in New York, surpassing its previous closing high of 14,164.53 as well as its intraday peak of 14,198.1 from Oct. 11, 2007. The Standard & Poor's 500 Index added 1 percent to 1,539.80 today. The benchmark gauge is less than 2 percent below its record high.
“People are now starting to realize that it is a bull market,” Laszlo Birinyi, president of Birinyi Associates Inc. in Westport, Connecticut, said in an interview on Bloomberg Radio's “Surveillance” with Tom Keene and Michael McKee. “It's not going to come back, you've missed the train, and the train still has a long way to go. But you better get on it.”
The bull market in U.S. equities enters its fifth year this month. The S&P 500 has surged 128 percent from a 12-year low in 2009 as companies reported better-than-estimated earnings and the Federal Reserve embarked on three rounds of bond purchases to stimulate the economy.
U.S. stock indexes advanced this week amid optimism the Fed will maintain stimulus measures to support the economic recovery. Fed Vice Chairman Janet Yellen said yesterday the U.S. central bank should press on with $85 billion in monthly bond buying while tracking possible costs and risks from the unprecedented program.
Global equities also rose today as China pledged to support economic expansion. The nation will keep its growth target at 7.5 percent for this year and plans a 10 percent jump in fiscal spending, the government said during the start of the National People's Congress today.
Services Report
The Institute for Supply Management's index of U.S. non- manufacturing businesses, which covers about 90 percent of the economy, rose to 56 in February from the prior month's 55.2, the Tempe, Arizona-based group said today. Readings above 50 signal expansion. The ISM services survey covers industries ranging from utilities and retailing to housing, health care and finance.
“This is clearly a day where investors are looking to put risk on,” Andrew Milligan, head of global strategy at Standard Life Investments Ltd., who helps manage over $263.9 billion, said in a phone interview. The Edinburgh, U.K.-based firm manages over $263.9 billion. “Services are a much, much larger part of all economies now than the manufacturing sector.”
Birinyi, who was one of the first money managers to tell clients to buy before the bull market began in March 2009, said technology, materials and energy stocks are the best choices today. Salesforce.com Inc., the largest maker of online customer-management software, is an example of a well-performing cyclical stock, he said.
--Bloomberg News--
