Wall Street nears pre-Lehman highs
WALL Street stocks rose yesterday after data showed the US labour market remained on the mend, but the market stalled as it approached highs not seen since before the 2008 collapse of Lehman Brothers.
In an upbeat note for the economy, new US claims for unemployment benefits held steady last week and were at the lowest since the early days of the 2007-2009 recession.
Yesterday’s gains brought the benchmark S&P 500 index near 1,370, considered the upper end of a technical barrier.
The broad index has surged 8.4 per cent this year and more than 20 per cent from October lows, but many worry the market will soon run out of steam.
In the past four sessions, the S&P has hovered around 1,360, closing at a nine-month high last night.
“You have a reluctance to buy knowing we’re right up at former highs,” said Todd Salamone, director of research at Schaeffer’s Investment Research.
But the market has also been reluctant to sell off on bad news. Some analysts say the main factor preventing a correction has been the result of a commonly used investor protection.
“The fact that we’re not selling off sharply on bad news could be related to the huge amount of hedging going on,” said Salamone.
The Dow Jones industrial average gained 46.02 points, or 0.36 per cent, to 12,984.69. The S&P 500 Index rose 5.80 points, or 0.43 per cent, to 1,363.46. The Nasdaq Composite added 23.81 points, or 0.81 per cent, to 2,956.98.
Sears shares soared despite reporting a huge quarterly net loss, after the company reassured investors about its ability to pay down debt.
Shares of Vivus rose 78 per cent as investors bet its experimental weight-loss drug would be approved by US regulators.
The Nasdaq biotech index rose two per cent.
Hewlett-Packard tumbled 6.5 per cent to $27.05 and was the biggest drag on the Dow. Late Wednesday, the world’s number one computer maker posted a sharp decline in earnings and warned it would take several years to turn around its sprawling businesses.
Shares in AIG rose three per cent after hours as the bailed-out insurer posted a surprise quarterly profit of $19.8bn.