S&P 500 Closes Above 1,700 Points For First Time

NEW YORK (AP) -

Stocks roared back to record highs on Thursday, driven by good news on the economy.

The Standard & Poor’s 500, the Dow Jones industrial average and the Russell 2000 index set all-time highs. The S&P broke through 1,700 points for the first time. The Nasdaq hit its highest level since September 2000.

The gains were driven by a steady flow of encouraging reports on the global economy.

Overnight, a positive read on China’s manufacturing helped shore up Asian markets. An hour before U.S. trading started, the government reported that the number of people applying for unemployment benefits last week fell sharply.

Earnings results covered a wide range. Boston Beer, which makes Samuel Adams, and home shopping network operator HSN rose after beating analysts’ estimates for earnings and revenue. Kellogg, health insurer Cigna and cosmetics maker Avon were down after beating earnings predictions but missing on revenue.

It’s becoming a familiar template this year. Stock indexes have been setting record highs since April even while the underlying economy is often described as improving, but hardly going gangbusters. Because the stock market often looks ahead 6-9 months, it’s not unusual for stock indexes to be ahead of economic indicators, when the economy is improving or worsening. Right now, stock investors may be anticipating a stronger economy and better earnings next year.

Among Thursday’s stock index records: The S&P 500 index rose 21.14 points, or 1.3 percent, to 1,706.87. The Dow rose 128.48 points, or 0.8 percent, to 15,628.02. The Russell 2000 index of small-company stocks rose 14.62 points, or 1.4 percent, to 1,059.88.

The Nasdaq composite index rose 49.37 points, or 1.4 percent, to 3,675.74, in line with the daily gains of other indexes but still far short of its record. The Nasdaq, which is heavily weighted with technology stocks, briefly veered above 5,000 points in March 2000, just before the internet bubble burst.

Investors said Thursday that the S&P’s crossing over 1,700 points might give consumers a psychological boost, but they were hardly crowing about a new era in stocks. Turns out it’s quite common for indexes to hit records. Since 1950, the S&P has hit a high about 7 percent of the time, or an average of about every 15 days, Courtney said. The S&P’s last record close was just eight trading days earlier, on July 22.

The S&P made the jump from 1,600 to 1,700 in less than three months. The index first traded above 1,600 on May 3. The first close above 1,500 was in March 2000.

Among the good economic and corporate news that cheered investors Thursday:

  • China’s purchasing managers’ index — a gauge of business sentiment — rose to 50.3 in July from 50.1 in June. Analysts had expected a modest decline below 50.
  • The Labor Department said that the number of Americans applying for unemployment benefits fell 19,000 to 326,000. That was the fewest since January 2008, one month after the Great Recession started in December 2007.
  • The Institute for Supply Management, a trade group of purchasing managers, said its index of manufacturing jumped to 55.4 in July, up from 50.9 in June and well above an expected reading of 51.8. A number above 50 indicates growth.
  • Auto companies reported strong sales gains for July. Ford, Chrysler and Nissan each reported U.S. sales growth of 11 percent compared with the same month a year ago.

An index of transportation stocks also rose sharply. Many investors see that sector as a leading indicator for the economy because freight and shipping companies tend to get busier as the economy improves.

The Dow Jones Transportation average jumped 208.26 points, or 3.2 percent, to 6,670.06, led by a surge in Con-way, a Michigan-based freight company that reported earnings Thursday that were far higher than investors expected. Con-way rose $4.34, or 10.5 percent, to $45.79.

The price of crude oil rose $2.86, or 2.7 percent, to $107.89 a barrel. Gold slipped $1.80 to $1,311.20 an ounce. The dollar rose against the euro and the Japanese yen.

The yield on the 10-year Treasury note rose sharply, to 2.72 percent from 2.58 percent late Wednesday. That means investors were selling U.S. government debt securities, possibly over fears that rates will go higher as the economy strengthens and they’ll lose more money. When yields rise, the value of bonds falls.