UNITED STATES (BLOOMBERG) - The Nasdaq Composite Index closed above 5,000 for the first time in 15 years while the Dow Jones Industrial Average and Standard & Poor's 500 Index reached records as gains in consumer purchases signalled strength in the biggest part of the economy.
Whirlpool Corp, Walt Disney and Tiffany & Co added more than 1.4 per cent, bolstering gains in discretionary stocks. Energy companies in Standard & Poor's 500 Index fell 0.7 per cent as the price of Brent crude oil lost more than 4 per cent.
The Nasdaq Composite added 0.9 per cent to 5,008.10 at 4 pm in New York. The S&P 500 climbed 0.6 per cent to a record 2,117.39, and the Dow advanced 155.93 points, or 0.9 per cent, to 18,288.63, also an all-time closing high. The Russell 2000 Index rose 0.8 per cent to a record 1,242.62.
"There's a lot to digest after the market snapped back with a good month after January was horrible," Mr Larry Peruzzi, the Boston-based director of international trading at Cabrera Capital Markets, said by phone. "The end result is these markets are near or at all-time highs so it'll be interesting to see if people look at that as an opportunity to take profit or if they say it's recovered and time to jump back in." The S&P 500 reached fresh records four times in February, while the Dow average climbed 5.6 per cent for its best month since January 2013. The index also topped its record from December for the first time in 2015.
Unlike the dot-com era, when investors snapped up Internet companies with promise but little profit, today's gains are built on earnings driven by demand for products such as Apple's iPhone and Google's web-search services.
Momentum is building in stocks that have the fastest profit growth, with companies from Apple to Intel spending more money than anybody else to buy back shares. While the advance has brought the Nasdaq close to new highs, valuations are only a fraction of where they were 15 years ago.
The Nasdaq Composite "is not going to make me change my investment strategy, but it makes me feel good about staying overweight stocks," Mr Paul Zemsky, the head of multi-asset strategies at Voya Investment Management, which oversees US$213 billion, said by phone from New York. "It's a confidence booster, both for the market and consumers and it'll make some good headlines." It has taken two bull markets and more than 4,500 days for the Nasdaq to get close to making up all the ground lost in the dot-com collapse. The index surged 7.1 per cent in February, its best month since 2012, and is within 1 per cent of a record reached in 2000.
The S&P 500 increased 5.5 per cent last month, rebounding from its worst month in a year with the biggest gain since October 2011, while the Dow rose 5.6 per cent.
Accommodative central-bank policy from Europe to Japan has spurred gains in global equities even as the US has ended its bond-buying program. The S&P 500 has more than tripled during a six-year bull run on the back of Fed stimulus and a doubling in corporate profits.
Consumer purchases adjusted for inflation rose in January, a sign the plunge in petrol prices is helping boost the biggest part of the U.S. economy. The 0.3 per cent increase followed a 0.1 per cent drop the prior month, a Commerce Department report showed Monday.
The Institute for Supply Management data showed manufacturing in February expanded at the slowest pace in a year as weaker growth abroad limited orders for American-made products.
Cardinal Health rose 1.7 per cent to an all-time high after agreeing to buy Johnson & Johnson's Cordis business for US$1.94 billion in cash, gaining a global manufacturer of cardiology and endovascular devices. J&J added 0.7 per cent.
Monday M&A NXP Semiconductors surged 17 per cent after agreeing to buy Freescale Semiconductor for about US$11.8 billion. Freescale rallied 12 per cent.
Visa rose 2.6 per cent to an all-time high and Citigroup gained 2 per cent after the two companies struck a deal to replace American Express in 2016 as the exclusive issuer for Costco Wholesale's credit cards in the US and Puerto Rico. Costco added 0.7 per cent.
Eight of 10 main industries in the S&P 500 gained, led by consumer discretionary companies' 1.2 per cent advance. Utilities fell for a fourth day, down 2 per cent, and energy lost 0.7 per cent.
Lumber Liquidators Holdings tumbled 25 per cent after a television report said the company sold flooring that didn't meet California health and safety standards. In a response to the allegations, the company said its products have been tested and are safe.
Noble Corp lost 4.2 per cent after Guggenheim Securities equity analyst Darren Gacicia cut the stock to a neutral rating from buy. The shares have lost 48 per cent since June amid the decline in the price of oil.
Navient Corp lost 8.8 per cent for the biggest decline in the S&P 500 after the US Department of Education announced the termination of a debt collection contract with Navient subsidiary Pioneer Credit Recovery. The stock was cut to neutral from buy by Compass Point equity analyst Michael Tarkan.
Genworth Financial slid 5.4 per cent after disclosing a material weakness in its internal accounting controls related to long-term care insurance claim reserves.
The Chicago Board Options Exchange Volatility Index fell 2.3 per cent to 13.04. The gauge, know as the VIX, lost 36 per cent in February for its biggest monthly drop on record.
Best Buy and Staples are among 13 S&P 500 companies posting results this week. Some 97 per cent have reported earnings so far, with 74 per cent of those beating projections and 57 per cent topping sales estimates.
Analysts predict profit at S&P 500 companies will drop 4.9 per cent in the current quarter after a 4.6 per cent increase in the final three months of 2014, data compiled by Bloomberg show.