January 13, 2011, CNBC Online
Stocks ended at new multi-year record highs for all the major indexes as the Federal Reserve reported improving economic conditions across the country, and as upbeat earnings outlooks for banks lifted investor sentiment.
The Dow Jones Industrial Average rose 83.56 points, or 0.7 percent, to close at 11,755.44, the blue-chip indexes highest close since Aug. 11, 2008.
Most Dow components advanced, led by JPMorgan, Bank of America and Boeing. Walt Disney and Alcoa slipped. The S&P 500 rose 11.48 points, or 0.9 percent, to close at 1,285.96, its highest close since Aug. 28, 2008, while the Nasdaq gained 20.50 points, or 0.75 percent, to close at 2 737.33, its highest close since Nov. 7, 2007.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell below 17. All key S&P sectors gained, led by financials, energy and materials. The Federal Reserve’s monthly "beige book" release of economic conditions across the country showed the nation’s economy strengthened at the end of the year. The survey did, however, note that the housing market remains troubled, as prices continue to fall and millions of homes remain in foreclsoure.
A successful bond auction in Portugal, and positive earnings outlooks for banks published in several brokerage firm reports, served as catalysts to push stocks higher on Wednesday in the early stages of what many investors expect will be an upbeat earnings season. The euro rose against the dollar on news of the Portugese bond offering, while the U.S. currency fell against a basket of currencies as well. Gold, meanwhile, gained to close at $1,385.70 an ounce, after initially slipping in the wake of the Portugese bond auction.
The positive tone to the stock market comes as investors realize corporations are well positioned to take advantage of a strengthening economy, said Marc Pado, market strategist at Cantor Fitzgerald. In the fourth quarter, corporations kept costs low and inventories down as sales rose, Pado said. "There’s the potential for some positive surprises for the fourth quarter, and the prospects for the first quarter are good," Pado said. "Ultimately we’ll see better jobs data," he added. "As long as that’s the case it’s really hard for bears to get the upper hand here."