The Standard & Poor’s 500 Index closed at an all-time high on Friday, as a rally in oil prices and better-than-forecast economic growth in Europe offset a decline in American consumer confidence.
The S&P 500 advanced 0.4 per cent to 2,096.99 at 4 p.m. on Friday in New York, above a closing high set on Dec. 29. The Russell 2000 Index climbed 0.6 per cent to a record close.
The Nasdaq Composite Index added 0.8 per cent to its highest level in almost 15 years. The Dow Jones Industrial Average added 46.97 points, or 0.3 per cent to 18,019.35.
“The economy is moving forward steadily, which justifies the gains,” Peter Jankovskis, who helps oversee $1.9 billion as co-chief investment officer of Lisle, Illinois-based OakBrook Investments LLC., said in a phone interview. “I see nothing to suggest we’re at an absolute peak. The fact that we’re at new records suggests that people think crude is on the floor.”
Equities gained early on Friday as data showed the euro-area economy picked up momentum at the end of last year, with Germany reasserting itself as the driver of growth, offsetting weakness in Greece and Italy.
Government officials taking part in Greece’s debt negotiations said both sides are signaling willingness to compromise, while the German economy, Europe’s largest, expanded 0.7 per cent in the fourth quarter, more than twice as much as forecast.
Equities pared gains as data in the U.S. showed consumer confidence fell in February as gas prices started to rise from a six-year low and damped Americans’ optimism about the economy.
The University of Michigan preliminary sentiment index decreased to 93.6 from a final January reading of 98.1 that was the highest since the start of 2004. The median projection in a Bloomberg survey of economists called for no change from last month.
U.S. equities reached record levels for the first time in 2015, bolstered by the biggest three-month rise in hiring in 17 years and signs of easing tension between Greece and its euro-area creditors.
The benchmark gauge has more than tripled from its bear-market low in March 2009, propelled higher by better-than-forecast corporate earnings and three rounds of Federal Reserve bond purchases. The Fed renewed its pledge in January to maintain record-low borrowing costs even as the economy shows signs of acceleration.
The S&P 500 has gone more than three years without a retreat of 10 per cent or more. But unlike last year, when the gauge never had a streak of losses that exceeded three days, the route higher in 2015 has seen repeated interruptions.
The index has rallied 5.1 per cent in February after sinking 3.1 per cent in January for its worst month in a year. Since the start of 2015, the S&P 500 has experienced three declines of more than 2.7 per cent, only to recover within a week each time, data compiled by Bloomberg show.
The strongest dollar in a decade and a plunge in oil prices that threaten investment and earnings growth have tested the resilience of investors as the bull market nears its seventh year. Concern that European growth is slipping amid signs of deflation, coupled with a showdown that led to speculation Greece would exit from the region’s shared currency also weighed on investor sentiment.
Beneath the surface of the biggest equity rally since the dot-com bubble, institutions are taking steps to shield themselves should the momentum burn out. Options traders have snapped up so many puts, which pay off when the S&P 500 falls, that their cost relative to bullish contracts has jumped to the highest level since at least 2006.
The Chicago Board Options Exchange Volatility Index fell 4.2 per cent to 14.69, the lowest since December. The gauge, know as the VIX, is down 15 per cent for the week after losing more than 17 per cent last week.
Six of 10 major groups in the S&P 500 advanced, led by energy shares. Utilities had the biggest decline, dropping 1.6 per cent.
Energy companies climbed 2 per cent. Oil extended its rally, with West Texas Intermediate gaining 3.1 per cent, amid speculation that a decline in U.S. drilling will slow crude output and curb a global supply glut. Apache Corp. said Thursday it’s cutting its rig count by 70 per cent.
Refiner Valero Energy Corp. rose for a second day, adding 3.6 per cent for its highest level since 2008. Pipeline operator Williams Cos. added 3 per cent to a two-month high, and Denbury Resources Inc. advanced 4.7 per cent.
CBS Corp. added 3.6 per cent as fourth-quarter results beat estimates, buoyed by higher advertising sales and rising fees from both local broadcasters and pay-TV services.
King Digital Entertainment Plc rose 13 per cent after quarterly sales of titles other than Candy Crush Saga increased, signaling the company is diversifying from its top-selling game.
Microsoft Corp. climbed 1.8 per cent, extending gains for a second day after news Thursday that the company plans to buy mobile-productivity applications that work on Apple Inc. and Google Inc. operating systems, according to people familiar with the situation.
ConAgra Foods Inc. and Campbell Soup Co. were a drag on consumer staples in the benchmark index as the group lost 0.5 per cent. The two food makers fell at least 1.8 per cent after cutting their profit outlooks, citing in part the negative impact of a stronger dollar.
Financials fell as American Express Co. slumped 3 per cent to the lowest in more than a year. JPMorgan Chase & Co. and others lowered their target price for the stock after the card issuer said Thursday it plans to end co-brand and merchant agreements with Costco Wholesale Corp.
Charles Schwab Corp. slid 2.8 per cent. Shares had gained 15 per cent in February, the most since May 2013, capped by a 3.1 per cent climb Thursday.
Zynga Inc. tumbled 16 per cent, after dropping 5.3 per cent yesterday. The maker of the mobile video game FarmVille projected first-quarter earnings that trailed analysts’ estimates and said it will close its Beijing office.
Earnings for S&P 500 companies rose 4.1 per cent last quarter, while sales gained 1.4 per cent, according to analysts’ forecasts compiled by Bloomberg. More than two-thirds of S&P 500 companies have reported so far, with 76 per cent beating profit estimates and 56 per cent topping sales projections, data compiled by Bloomberg show.
News by Bloomberg, edited by ESM
