S&P 500 closes above 1,700 points for first time ever

The Standard & Poor's 500, the Dow Jones industrial average and the Russell 2000 index set all-time highs. The S&P broke through 1,700 points for the first time. The Nasdaq hit its highest level since September 2000.
By CHRISTINA REXRODE Modified: August 1, 2013 at 9:56 pm •  Published: August 2, 2013
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— Stocks roared back to record highs on Thursday, driven by good news on the economy.

The Standard & Poor's 500, the Dow Jones industrial average and the Russell 2000 index set all-time highs. The S&P broke through 1,700 points for the first time. The Nasdaq hit its highest level since September 2000.

The gains were driven by a steady flow of encouraging reports on the global economy.

Overnight, a positive read on China's manufacturing helped shore up Asian markets. An hour before U.S. trading started, the government reported that the number of people applying for unemployment benefits last week fell sharply. At midmorning, a trade group said U.S. factories revved up production last month. And while corporate earnings news after the market closed Wednesday and throughout Thursday brought both winners and losers, investors were able to find enough reports they liked, including those from CBS, MetLife and Yelp.

Some improvement

Overall, analysts said, the news was good but not overwhelmingly so. Enough to suggest that the economy is improving, but not enough to prompt the Federal Reserve to withdraw its economic stimulus programs.

Earnings results covered a wide range. Boston Beer, which makes Samuel Adams, and home shopping network operator HSN rose after beating analysts' estimates for earnings and revenue. Kellogg, health insurer Cigna and cosmetics maker Avon were down after beating earnings predictions but missing on revenue.

It's becoming a familiar template this year. Stock indexes have been setting record highs since April even while the underlying economy is often described as improving, but hardly going gangbusters.

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In other news

Among the good economic and corporate news that cheered investors Thursday:

• China's purchasing managers' index — a gauge of business sentiment — rose to 50.3 in July from 50.1 in June. Analysts had expected a modest decline below 50.

• The Labor Department said Americans applying for unemployment benefits fell 19,000 to 326,000 — the fewest since January 2008, one month after the Great Recession started in December 2007.

• The yield on the 10-year Treasury note rose sharply, to 2.72 percent from 2.58 percent late Wednesday. That means investors were selling U.S. government debt securities, possibly over fears that rates will go higher as the economy strengthens. When yields rise, the value of bonds falls.

Among stocks making big moves:

• Sprouts Farmers Markets more than doubled on the company's first day of trading, jumping $22.11 to $40.11 — another sign that investors are becoming more comfortable taking on risk.

• Yelp soared $9.70, or 23.2 percent, to $51.50. The consumer review website continued to lose money in its latest quarter, but it sold more ads and drew more visitors.

• Exxon Mobil fell $1.02, or 1.1 percent, to $92.73, after reporting lower earnings as oil and gas production slipped. Profit margins on refining oil also fell.

No news is

good news

The market's sharp advance Thursday was a stark contrast with the previous two days, when the S&P 500 moved less than a point each day. Tuesday, investors didn't want to make big moves ahead of the Federal Reserve's policy announcement the next day. Wednesday, the Fed didn't make much news after all. The central bank said, unsurprisingly, that the U.S. economy was recovering but still needed help. The Fed didn't give any indication of when it might cut back on its bond-buying program.

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