S&P 500 Breaks Record
March 28, 2013 by ALEXANDRA SCAGGS
After weeks of false starts, the Standard & Poor’s 500-stock index finally broke a six-year-old closing high to mark a new all-time new record.
The push to record territory came in midmorning trading, as the S&P 500 broke past its previous record close of 1565.15 on Oct. 9, 2007.
The S&P 500 gained 6.34 points, or 0.4%, to 1569. The Dow Jones Industrial Average gained 52.38 points, or 0.4%, to 14578.54, also finishing the quarter at a new closing record. The Nasdaq Composite index tacked on 11.00 points, or 0.3%, to 3267.52.
The S&P 500 had flirted with its closing record for two weeks before finally vaulting over that level Thursday. It had come within five points of the closing high in seven of the past 10 sessions.
“The market has been trying and trying, and we finally crossed the line,” said Quincy Krosby, a market strategist at Prudential Financial, PRU -0.20%which manages roughly $1 trillion in assets. “Having the Dow reaching new highs was good, but the S&P 500 is broader, it’s bigger… it’s an important message for investors.”
The S&P 500 still remains just off its all-time intraday high of 1576.09 on Oct. 11, 2007. After hitting that peak more than five years ago, the benchmark shed more than half its value during the financial crisis, sinking to a close of 676.53 on March 9, 2009. Its market capitalization was $5.9 trillion at the 2009 low.
Richard E. Sylla, financial historian and professor of economics at NYU’s Stern School of Business, discusses the likelihood of a series of markets highs, the impact of the Fed’s ability to keep interest rates down, and the tendency for investors to buy high and sell low, in a big interview with WSJ’s Jason Zweig.
Since then, it has climbed steadily higher on the back of rising corporate earnings by U.S. companies. Its market capitalization has recovered to reach nearly $14 trillion. The three best performers in that time have been Wyndham Worldwide, WYN +0.69%CBS Corp. CBS +1.15%and Tenet Healthcare THC +0.08%.
The final leg higher for the S&P 500, a 10% rise in the first three months of this year, came despite a renewed flare-up of the euro-zone debt crisis. But as troubled euro-zone member Cyprus reopened its banks Thursday, there was little sense of panic, which calmed investor nerves and set the stage for the index’s push into record territory.
Gordon Charlop, managing director at Rosenblatt Securities on the floor of the New York Stock Exchange, said of the record, “There seemed to be an air of inevitability to this. We’re here on the back of stimulus, we’re here on the back of no real alternatives for investors.”
“Until there is a significant paradigm shift that will cause a reversal, the bulls have the swagger,” he said.
The latest benchmark record caps a strong first quarter for stocks. The blue chips, which hit a new high on March 5, notched their best first quarter since 1998, adding more than 11%. The S&P 500 was up 10% for the quarter. While the S&P 500’s quarterly gains were outpaced by last year’s 12% first-quarter gain, the index marked its first five-month win streak since 2009.
Investors had been worried that the reopening of banks in Cyprus, after being closed for nearly two weeks amid negotiations on a bailout package, could lead to a widespread run on deposits. But while crowds did gather outside of banks before they reopened, investors were relieved to see there was little sign of panic.
“Banks in Cyprus are seeing more of a jog than any kind of run,” said Jeffrey Kleintop, chief market strategist for LPL Financial.
But a reading on manufacturing in the Chicago area weighed on stocks, sparking a brief turn lower after a report on activity in March came in below expectations. A disappointing weekly reading on the labor market also offset the optimism.
European markets traded mostly higher, with the Stoxx Europe 600 gaining 0.5%, as the relative calm in Cyprus overshadowed mixed data out of Germany.
The number of jobless Germans rose 13,000 in March versus expectations of an unchanged reading, but February retail sales increased 0.4% on the month compared with expectations of a 0.6% decline. Germany’s DAX 30 index tacked on 0.1%.
Meanwhile, Asian markets slumped, highlighted by a 2.8% tumble in China’s Shanghai Composite after the country’s banking regulator unveiled new controls on popular wealth-management products. Japan’s Nikkei Stock Average shed 1.3% and Australia’s S&P ASX 200 gave up 0.6%.
May crude-oil futures added 0.7% to $97.23 a barrel, while gold futures fell 0.7% to $1,594.80 a troy ounce. The dollar slipped against both the euro and the yen. Demand for Treasurys fell, with the yield on the benchmark 10-year note rising to 1.851%.
In corporate news, Research In Motion BB.T +1.96%reversed early gains to post losses in late trading after the BlackBerry maker reported a surprise fourth-quarter profit, but its revenue missed estimates and the company said it lost about three million subscribers during the quarter.
Discount retailer Five Below FIVE -3.24%slid after the company forecast weak full-year results.
—Chris Dieterich and Jonathan Cheng contributed to this article.
Write to Alexandra Scaggs at alexandra.scaggs@dowjones.com
