S&P 500 Rallies Fourth Day to Record, Erasing SelloffJoseph Ciolli
Benchmark equity indexes closed at records as a surge in technology shares helped U.S. stocks recover from a seven-day selloff in early December.
Facebook Inc. and Intel Corp. rose more than 1.9 percent to pace gains among technology shares. The Dow Jones Internet Index advanced 1.1 percent as Twitter Inc. and Amazon.com Inc. climbed at least 2.2 percent. The Nasdaq Biotechnology Index slumped 2.4 percent as Gilead Sciences Inc. sank 14 percent. Chevron Corp. lost 0.8 percent as energy companies slid.
The Standard & Poor’s 500 Index increased 0.4 percent to 2,078.54 at 4 p.m. in New York, above its previous record close of 2,075.37 reached Dec. 5. The Dow Jones Industrial Average climbed 154.64 points, or 0.9 percent, to 17,959.44, also a closing record. The Russell 200 Index added 0.5 percent to the highest since July, while the Nasdaq Composite Index finished 10 points below a more than 14-year high.
“Once the trend got turned last week, given the time of the year, it became a perfect storm to the upside,” Walter Todd, who oversees about $1 billion as chief investment officer for Greenwood, South Carolina-based Greenwood Capital Associates LLC, said in a phone interview. “Absent something from left field overseas or anything else unforeseen, stocks will continue to move higher and maybe approach that 2,100 level on the S&P by the end of the year.”
The S&P 500 and Dow climbed back to record levels after a slide in oil prices and a worsening of the financial crisis in Russia rippled through financial markets earlier this month, wiping more than $1 trillion from U.S. equity values in less than two weeks. The S&P 500 lost 5 percent in seven trading days through Dec. 16.
Today’s gains in the S&P 500 completed the fifth recovery this year from a decline of 4 percent or more, just 17 days after it started. In comparable drops beginning in January, April, July and September, the S&P 500 needed about a month to erase losses, data compiled by Bloomberg show.
This is the 50th time this year the S&P 500 has closed at an all-time high, while the Dow has done it 35 times. The S&P 500 reached records on 45 occasions in 2013, as the index recovered from the financial crisis to top its previous high from October 2007 for the first time.
The latest rebound gives the S&P 500 a gain of 5.4 percent for the month so far. The index has advanced in each of the past six Decembers, climbing an average 2.2 percent.
U.S. equities jumped 5.4 percent in the past four sessions, the best performance over that stretch since 2011, as Fed Chair Janet Yellen said the central bank will likely hold key rates near zero at least through the first quarter, even as the U.S. economy strengthens. Yellen also said any spillover from the situation in Russia is likely to be small.
U.S. stocks have tripled during the 5 1/2-year bull market, driven by the Fed’s three rounds of bond buying and borrowing costs near zero to stimulate the economy.
Data today showed purchases of previously owned U.S. homes dropped more than forecast in November as residential real estate struggles to sustain its recovery even as borrowing costs remain low.
The Chicago Board Options Exchange Volatility Index dropped 7.5 percent to 15.25. The options gauge known as the VIX has tumbled 35 percent in the four days following the Fed meeting after having doubled in the previous seven days.
Eight of 10 main groups in the S&P 500 rose today. Technology companies, which added 3 percent last week, led with a 1.1 percent gain. Apple Inc. increased 1 percent. The S&P 500 technology gauge has surged 20 percent in 2014.
Intel, Cisco Systems Inc. and International Business Machines Corp. climbed more than 1.6 percent for the best performances in the Dow.
The Dow Jones Internet Composite Index rose for a fourth straight day, adding 1.1 percent, to its highest level since Sept. 12. The gauge is up 4.2 percent in 2014, climbing back after a slump of more than 19 percent earlier this year.
Facebook jumped 2 percent and Google Inc. added 2.4 percent. Priceline Group Inc. climbed 3.6 percent, while Pandora Media Inc. and Expedia Inc. increased more than 1.4 percent.
Health-care shares decreased 1.2 percent. Gilead slid 14 percent after the biggest drug-benefit manager in the U.S. chose a pill from AbbVie Inc. to be the sole hepatitis C treatment approved for many patients, as insurers seek to rein in the rising cost of medicine.
Express Scripts Holding Co., which helps insurers and large employers provide drug coverage, opted to narrow doctors’ treatment options in exchange for lower prices. Express Scripts has waged a campaign all year against Gilead’s hepatitis C drugs, calling their cost of more than $1,000 a pill part of an unsustainable trend of surging prices for medicine designed to treat complex health conditions.
Biotechnology and life-science companies were the biggest drag on the S&P 500 among 24 industries, taking 4 points off the index. The group accounts for 9.7 percent of the equities benchmark, second most among 24 groups behind software companies.
The Nasdaq Biotechnology Index slipped 2.4 percent, paring an earlier drop of as much as 3.3 percent. The gauge is up 36 percent in 2014, reaching a record on Dec. 19 after recovering from a slump of more than 20 percent earlier this year.
Other drug companies retreated. Biogen Idec Inc. and Eli Lilly & Co. lost more than 1.3 percent. Celgene Corp. slipped 3.1 percent.
Energy companies in the S&P 500 fell 1 percent as the price of crude oil declined for the second time in three days. The shares had the biggest rally in the benchmark index last week, climbing 9.7 percent.
Oil has slumped about 21 percent since OPEC decided against cutting its production target last month, prompting a plunge in the value of currencies from the Russian ruble to the Norwegian krone.
Chesapeake Energy Corp. and Southwestern Energy Co. slid more than 5.4 percent, while Transocean Ltd. decreased 1.8 percent.
Caesars Entertainment Corp. surged 11 percent, its biggest increase in more than five weeks. The casino operator is buying back an affiliate it set up last year in a deal that will help it restructure $18.4 billion of debt.