Dow, S&P 500 end at record highs; Bank of Japan stimulus adds fuel to rally

NEW YORK (REUTERS) - The Dow and S&P 500 ended at record highs on Friday and other indexes posted strong gains for a second week after the Bank of Japan's surprise move to ramp up its stimulus programme.

Major indexes also posted gains for the month, putting in a sharp recovery from their recent selloff that almost drove the S&P 500 into correction territory.

The benchmark index is now up 8.4 per cent from its Oct 15 low and up 9.2 per cent for the year so far.

The Nasdaq finished at its highest since March 2000, while for the week the Dow rose 3.5 per cent, its best percentage weekly gain since January 2013.

The S&P 500 posted its best two-week gain since December 2011.

The day's gains were broad, with the benchmark S&P 500 index posting 126 new 52-week highs and the Nasdaq recording 229 new highs.

Shares of Exxon Mobil, up 2.4 percent at $96.71, and Chevron, up 2.3 per cent at US$1119.95, were among the biggest positives for the Dow and S&P 500 after they reported stronger-than-expected results.

"The market technically went from violating moving averages to making new highs, and you get this surprise move out of the Bank of Japan, which is giving a little tailwind to the rally," said Eric Kuby, chief investment officer at North Star Investment Management in Chicago.

The move by the Bank of Japan, whose board voted to accelerate purchases of Japanese government bonds while tripling its purchases of exchange-traded funds and real-estate investment trusts, comes just days after the Federal Reserve wound down its years-long package of incentives.

More stimulus globally could help the outlook for stocks, especially if the US economy keeps improving and earnings keep growing, analysts said.

Worries about the global economy and its impact on US earnings, the spread of Ebola and slumping oil prices were largely behind the market's recent selloff.

The majority of S&P 500 companies are beating third-quarter earnings expectations so far. With results in from 70 per cent of companies, 75.8 per cent are reporting earnings above analysts' expectations, according to Thomson Reuters data, well above the 63 per cent average in the past 20 years.

The Dow Jones industrial average rose 195.1 points, or 1.13 per cent, to 17,390.52, a record close. The Dow also hit an intraday record high of 17,395.54.

The S&P 500 gained 23.4 points, or 1.17 per cent, to 2,018.05, a record finish. It came within about a point of hitting an intraday record high. The Nasdaq Composite added 64.60 points, or 1.41 per cent, to 4,630.74.

For the week, the S&P 500 was up 2.7 per cent and the Nasdaq was up 3.3 per cent. For the month, the Dow was up 2 per cent, the S&P 500 was up 2.3 per cent and the Nasdaq was up 3 per cent.

Among the day's biggest percentage gains, shares of Expedia rose 5.3 per cent to US$84.97 a day after it reported results. GoPro shares jumped 13 per cent to US$77.10 after forecasting better-than-expected holiday quarter sales.

The largest decliner on the Nasdaq was Starbucks, down 2.3 per cent at US$75.56, a day after it reported results.

About 8.3 billion shares changed hands on US exchanges, compared with the 7.8 billion average for the month to date, according to data from BATS Global Markets.

Advancing issues outnumbered declining ones on the NYSE by 2,363 to 717, for a 3.30-to-1 ratio on the upside; on the Nasdaq, 1,921 issues rose and 816 fell for a 2.35-to-1 ratio favouring advancers.