It didn’t make it by much, but the S&P 500 closed above 2000 – 2000.02 to be exact – for the first time ever on Tuesday.
It looked earlier in the day like the index was going to close comfortably over the milestone, having hit a high of 2005 around 11:30, but the index lost steam as the day progressed, barely holding on above the 2000 mark at session’s close with a 0.1% gain after having been up as much as 0.4%. The Dow Jones Industrial Average also closed at a new record high, rising 0.2%. But small cap stocks fared better today, the S&P 600 rising 0.7% and the Russell 2000 gaining 0.9%. NASDAQ rose 0.3%. Among the winners on NASDAQ was Amazon, which jumped 2.3% after announcing its biggest acquisition to date, agreeing to pay $970 million to buy Twitch Interactive, which provides real-time streaming videos of videogame content.
U.S. stocks got a boost from economic reports that came in mostly better than expected.
- The Conference Board’s consumer confidence index rose more than two points to 92.4 in August, nearly three points above expectations and its highest level since October 2007.
- The usually volatile durable goods orders report was particularly so in July, with the headline figure soaring a record 22.6%. But that was skewed by a 318% jump in aircraft orders following the U.K. air show. But excluding the transportation sector, where overall orders jumped 74%, orders actually fell 0.8%, well below the forecast of a 0.4% gain. That was offset somewhat, however, by an upward revision in the June figure to a 3% gain from 0.8%.
- Home price increases continued to level off. The S&P/Case-Shiller 20-city index fell 0.2% in June while the year-over-year increase rose 8.1%, down from 9.3% in May and the smallest one-year gain in over a year. A similar index from the Federal Housing Finance Agency rose 0.4% in June from the prior month and 5.1% compared to a year earlier, down from the prior month’s 5.3% YOY rise.
European stocks rose sharply for a second straight day while sovereign bond yields continued to fall to record low levels. The major indexes in France, Italy and Spain were all up more than 1% and Germany’s DAX index rose 0.8%, about half as much as Monday’s big gains, as investors anticipate a stimulus package soon from the European Central Bank. In the bond market, the yield on the 10-year Spanish government bond dropped another eight basis points to 2.17%, more than 20 basis points below comparable U.S. Treasurys. The yield on comparable Italian bonds fell five bps to 2.43%. Benchmark German bunds were unchanged at 0.94%. The euro was also lower, remaining well below $1.32, its lowest level in about 11 months.
Asian stocks were mostly lower. The Shanghai composite fell an even 1% while Japanese stocks lost 0.6% and Hong Kong stocks fell 0.4%. India’s Sensex was up fractionally while Korea’s KOSPI index rose 0.4%. The yen fell to 104 against the dollar, its lowest level since late January; the Japanese currency has lost about 3% over the past month.
Reports/dates/facts/links worth paying attention to over the next week:
- August 28: U.S. GDP, first revision of Q2 growth (4.0%); corporate profits, first estimate for Q2.
- August 29: U.S. personal income, spending and inflation (July); University of Michigan consumer sentiment (August final).
- August 31: Markit/JMMA manufacturing PMI for Japan (August); Markit manufacturing PMI for China (August).
Copyright © 2014 by Wright Investors’ Service, Inc. The views expressed in this blog reflect those of Wright Investors’ Service, Inc. and are subject to change. Statements and opinions therein are based on sources of information believed to be accurate and reliable, but Wright Investors’ Service, Inc. makes no representations or guarantees as to the accuracy or completeness thereof. These views should not be relied upon as investment advice.