While you were sleeping: Wall Street touches record
Aug. 22 (BusinessDesk) - Wall Street rose, lifting the Standard & Poor’s 500 Index to a record, as a flurry of economic data underpinned the view that growth in the world’s largest economy is accelerating at a pace that allows the US Federal Reserve to remain accommodative.
In late afternoon trading in New York, the Dow Jones Industrial Average climbed 0.47 percent, the Standard & Poor’s 500 Index advanced 0.35 percent, while the Nasdaq Composite Index gained 0.10 percent. The S&P 500 last traded at a record high 1,993.42.
First there was good news on the jobs front. The Labor Department said initial claims for state unemployment benefits dropped 14,000 to a seasonally adjusted 298,000 for the week ended August 16.
Housing also offered another sign of hope for a sustained recovery. The National Association of Realtors said existing home sales rose 2.4 percent to an annual rate of 5.15 million units.
Manufacturing also shone. Markit’s preliminary US manufacturing purchasing managers’ index rose to 58 in August, from 55.8 in July. It was the highest level in four years. Separately, the Philadelphia Fed's business activity index climbed to 28.0 this month, up from 23.9 in July, and is now at a three-year high.
Finally, the Conference Board's leading economic index gained 0.9 percent in July, following an increase of 0.6 percent in the previous month.
"It seems that conditions reflect the best of all worlds," Terry Sandven, chief equity strategist at US Bank Wealth Management in Minneapolis, told Reuters. "US economic growth that is neither too slow, which would put pressure on earnings, nor too fast, implying inflationary pressures which could lead to (price-to-earnings ratio) contraction and possibly accelerate the Fed’s move towards higher interest rates."
All eyes are squarely on Fed Chair Janet Yellen’s speech on Friday in Jackson Hole, Wyoming.
Shares of eBay rallied, last up 4.6 percent, after The Information website reported the company may spin off its PayPal payment business as early as next year.
Shares of Hewlett-Packard jumped, last up 6 percent, after the company reported its first sales growth in 12 quarters.
Bank of America shares rose 3.1 percent after it finalised an agreement to pay $US16.6 billion to US authorities to settle a long probe into sales of home loans.
However, shares of Sears slumped, last down 6.2 percent, after the company reported its ninth consecutive quarterly loss amid a further slide in sales.
In Europe, the Stoxx 600 finished the session with a 0.7 percent increase from the previous close. The UK’s FTSE 100 rose 0.3 percent, Germany’s DAX advanced 0.9 percent, while France’s CAC 40 added 1.2 percent.
Markit's preliminary purchasing managers’ index for euro-zone manufacturing and services activity slid more than expected to 52.8 in August, down from 53.8 in July.
“The eurozone economy continued to make steady progress in August, as the region looks to bounce back following the recent weaker-than-expected GDP readings for the currency union," Rob Dobson, senior economist at Markit, said in a statement.
“However, with the PMI Output Index slipping slightly to 52.8, the region remains on course to register growth of only around 0.3 percent-0.4 percent in the third quarter, a level that is unlikely to stimulate any real turnaround in the labour market."