While you were sleeping: Wall Street hits record

Wednesday 28th May 2014

Wall Street rose, pushing the Standard & Poor’s 500 Index to a fresh record high, amid a slew of data showing that the US economy is gathering steam after an unusually cold winter.

In the final hour of trading in New York, the Dow Jones Industrial Average rose 0.34 percent, the S&P 500 gained 0.51 percent, while the Nasdaq Composite Index added 0.95 percent. Earlier in the session the S&P 500 touched a record 1,911.61. US markets were closed on Monday for the Memorial Day holiday.

Gains in shares of American Express, up 2.7 percent, and Intel, up 1.2 percent, led the Dow higher.

"It appears that the economy continues to bounce back from the harsh winter," John Ryding, chief economist at RDQ Economics in New York, told Reuters.

Orders for durable goods posted a surprise gain in April, rising 0.8 percent, after an upwardly revised 3.6 percent gain in March, according to Commerce Department data.

Separately, the Conference Board’s consumer confidence index increased to 83 in May, up from 81.7 a month earlier.

"Consumers assessed current conditions, in particular the labour market, more favourably,” Lynn Franco, director of economic indicators at the Conference Board, said in a statement.

There was good news from the housing industry too. The Standard & Poor's/Case-Shiller gauge of home prices in 20 metropolitan areas climbed 12.4 percent in March from a year ago.

Finally, Markit said its preliminary services Purchasing Managers Index rose to 58.4 in May, up from 55.0 in April.

“May’s flash services PMI survey is a further signal that the US economy has regained momentum through the second quarter of the year,” Tim Moore, senior economist at Markit, said in a statement. “New business growth within the service sector reached its fastest for over three years amid the greatest month-on-month acceleration since the index began in late 2009.”

Meanwhile, a US Treasury auction of two-year notes drew solid demand as investors bet that the US Federal Reserve is in no hurry to raise interest rates.

Direct bidders, non-primary-dealer investors that place their bids directly with the Treasury, bought 25.2 percent of the notes, the most since December 2013, according to Bloomberg News.

“We are still in a world where quantitative easing is the law of the land,” Gabriel Mann, a US government-bond strategist at Royal Bank of Scotland Group’s RBS Securities unit in Stamford, Connecticut, told Bloomberg. “The Fed is still committed to holding the front end low until we see substantial growth and a lessening of slack in the labour market. No one is too interested in selling.”

In Europe, the Stoxx 600 Index ended the day with a 0.2 percent advance from the previous close. France’s CAC 40 inched 0.1 percent higher, the FTSE’s 100 Index added 0.4 percent, while Germany’s DAX rose 0.5 percent.

BusinessDesk.co.nz

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