The Dow and the S&P 500 have closed at new record highs on robust corporate earnings reports and the latest reaffirmation of the US Federal Reserve’s easy-money policy.
The Dow Jones Industrial Average on Thursday rose 78.02 (0.50 per cent) to 15,548.54.
The broad-market S&P 500 ended 8.46 (0.50 per cent) higher at 1,689.37.
The rally solidly topped both indices’ prior closing records set on Monday of 15,484.26 on the blue-chip Dow and 1,682.50 on the S&P 500.
The tech-rich Nasdaq Composite Index, meanwhile, eked out a gain of 1.28 (0.04 per cent) to 3,611.28 after some disappointing earnings reports, including from Dow member Intel.
The new records followed a second day of congressional testimony from Federal Reserve chairman Ben Bernanke that came and went with no bombshells. Bernanke reiterated that the Fed plans to scale back its bond-buying program, but only when the economy improves.
More companies have exceeded earnings expectations than lagged them. S&P Capital IQ now expects second-quarter earnings for the S&P 500 to rise by an average of 3.88 per cent compared with Friday’s estimate of 3.19 per cent.
“We are seeing earnings creep higher as the reporting period proceeds,” said Sam Stovall, chief investment strategist at S&P Capital IQ
Dow component UnitedHealth Group shot up 6.5 per cent after profits were $US1.40 per share compared with projections of $US1.25.
Boeing, another Dow member, put on 2.7 per cent after a British safety agency, investigating a fire aboard a parked 787 Dreamliner, focused primarily on a transmitter system and not on the electrical system of Boeing’s new plane.
Two large banks in the Dow, Bank of America and JPMorgan Chase, rose by 3.1 per cent and 2.0 per cent, respectively, after peer Morgan Stanley became the latest big financial company to beat earnings estimates by a large margin. Morgan Stanley leaped 4.4 per cent.
But chip-maker Intel sank 3.8 per cent as declining personal computers demand trimmed profits by 29 per cent.
Other Dow decliners included Verizon (down 1.5 per cent) and American Express (down 3.6 per cent).
Dell jumped 1.9 per cent after postponing a shareholders vote on a go-private proposal in the face of criticism.
Sherwin-Williams plummeted 8.3 per cent after revenue and net income lagged expectations. The paint manufacturer also announced that Mexican competition authorities had opposed a proposed $US2.3 billion acquisition of Mexican paint and coatings company Consorcio Comex.
Bond prices tumbled. The yield on the 10-year Treasury bond rose to 2.53 per cent from 2.49 per cent late on Wednesday, while the 30-year jumped to 3.63 per cent from 3.57 per cent. Bond prices and yields move inversely.
