U.S. stock rise lifts S&P 500 above 1,400
NEW YORK (MarketWatch) -- U.S. stocks rose Tuesday, with the S&P 500 index closing above 1,400 and the Nasdaq Composite atop 3,000 for the first time since May, on the view the recovery would survive Europe's financial crisis and other pitfalls.
"The environment has changed for a lot of reasons, but the most important is investors generally came to the conclusion that although the risks are fairly substantial, neither the 'fiscal cliff' nor the European contraction is going to derail the U.S. recovery. It's going to continue, albeit it at an anemic pace," said Hugh Johnson, chairman of Hugh Johnson Advisors.
The benchmark indexes rose for a third session, with the Dow Jones Industrial Average (DJIA) climbing as many as 98 points before finishing 51.09 points higher, a gain of 0.4%, at 13,168.60.
Twenty-one of the Dow's 30 gained. Blue-chip decliners included
Investors appear to be shedding worries, at least for now, about the so-called fiscal cliff -- a term for a potential squeeze on investors from the year-end expirations of tax cuts and the start of spending decreases.
"The odds are very strong that as incompetent as they are in Washington, they'll postpone the tax increases and spending cuts that are pre-scheduled for the end of the year, and although there is a contraction in Europe that is hurting U.S. exports and showing up in the earnings of many companies, that it's not big enough to cause a recession here, or have a serious impact," said Johnson.
The S&P 500 index (SPX) added 7.12 points, or 0.5%, to 1,401.35, with energy pacing gains that had the index surpassing 1,400 for the first time since early May.
A close above 1,405 would have been notable, given that's where the index closed on May 1, and "we haven't been there since," said Randy Frederick, managing director of active trading and derivatives at Charles Schwab.
Once the index closes above 1,405 "we're going to head higher and take out the yearly closing high of 1,419," he added of the level reached on April 2.
The Nasdaq Composite (COMP) climbed 25.95 points, or 0.9%, to 3,015.86, its first finish above 3,000 since May 3.
For every stock that lost ground nearly two advanced on the New York Stock Exchange, where composite volume neared 3.7 billion. Nasdaq composite volume came close to 1.9 billion.
Federal Reserve Bank of Boston President Eric Rosengren said in an interview that the Fed should purchase more bonds. On Monday, a spokesperson for German Chancellor Angela Merkel voiced support for a European Central Bank bond-purchasing plan.
"I'm shocked that this market has continued to push higher after the huge move we had last week. It could be this final statement by [ECB President Mario] Draghi. The immediate reaction was subdued, and it took time for people to digest, but it takes out prospects of a calamity," said Frederick at Charles Schwab.
"Our Fed is in a holding pattern," said Frederick, who said he believes Friday's nonfarm-payrolls report lessened chances of a third round of quantitative easing by the Fed, at least in the near term.
On Tuesday, the Labor Department reported job openings in June rose to a four-year high, signaling hiring could pick up in the latter half of the year.
"But Bernanke, like Draghi, has said, 'We're only going to let things deteriorate so far before we step in.' So we're in a sideways holding pattern, which isn't necessarily a bad thing for the market," Frederick said.