S&P 500 has best day of 2014
NEW YORK, USA
THE US stock market marched higher yesterday, giving the Standard & Poor’s 500 index its best day of the year.
Investors rallied behind an encouraging report on the Chinese economy as well as strong quarterly results from Apple and other big companies.
The market continues on its recovery from last week’s swoon and has now erased much of its losses over the last two weeks.
“I think it’s too early to call this a new rally, but I think there are definite signs that investors are gaining confidence again after last week’s volatility,” said Kristina Hooper, head of US investment strategies at Allianz Global Investors.
The Standard & Poor’s 500 index added 37.27 points, or two per cent, to 1,941.28. The Dow Jones industrial average rose 215.14 points, or 1.3 per cent, to 16,614.81. The Nasdaq composite rose 103.40 points, or 2.4 per cent, to 4,419.48.
This week so far has been a contrast to last week’s turbulence in many ways. Volatility is down, the S&P 500 index is on pace to have its best week of the year and the price of crude oil has stopped sliding. The bond market has also stabilised, with the 10-year Treasury note remaining around 2.2 per cent for the last several days.
“Last week the main thing driving the market was the decline in oil, the Ebola scare and the rally in the 10-year Treasury note. All of those items have stabilized,” said Ian Winer, director of equity trading at Wedbush Securities. “The Ebola risk, which was likely never a real issue, is being confirmed as such. Oil is holding at US$80 a barrel and the 10-year note has stabilised.”
That said, there’s still a chance for bumps ahead given that a meeting of the Federal Reserve is coming up next week where the central bank is expected to end its bond-buying economic stimulus programme for good. Growth worries in Europe and China are still top of mind, and with US corporate earnings season underway, the market’s direction could change quickly, traders and strategists said.
“Investors are likely to see more volatility, not less. We expected this to happen now that the Fed’s quantitative easing programme is ending,” Hooper said. “We are in unusual times, so expect to see more of an outsized reaction in the market.”
Since falling to a six-month low last week, the stock market has now basically recovered nearly all of its losses. After closing at 1,862.49 on October 15, the S&P 500 index has rallied more than 4 per cent in four days.
One notable part of the market investors have been moving back into is smaller, riskier companies. While the S&P 500 and Dow are still down 1.6 per cent to 2.5 per cent this month, respectively, the Russell 2000 is up 1 per cent for October.
“That’s an important sign that investors are regaining their confidence,” Hooper said.
Apple gave a boost to the overall market. The maker of iPhones and iPads rose $2.71, or 2.7 per cent, to US$102.47 after its quarterly results easily beat analysts’ expectations. Apple said it earned US$1.42 a share last quarter, helped by strong sales of the latest version of the iPhone.
Investors also had an encouraging report out of Asia. China’s economy expanded by 7.3 per cent in the third quarter from a year earlier. Although growth slowed slightly from the previous quarter’s 7.5 per cent, analysts had expected a more marked slowdown, to 6.9 per cent.
