Market Wrap: S&P 500 Closes Above 2,000 as Confidence Rises

Financial Markets Wall Street
AP/Richard Drew

It was a big round-number day for the stock market.

The Standard & Poor's 500 index closed a hair above 2,000 points Tuesday, 16 years after it closed above 1,000 points for the first time.

The milestone added to the market's gains from the day before and extended the stock index's record-shattering run this year.

The S&P 500 index, a widely followed barometer of the stock market, has closed at a new high 30 times this year. By this time last year, it had done so 25 times. The index briefly rose past 2,000 on Monday, but closed just below that level. It still set a record-high close in the process.

"There's perhaps a small psychological boost when you get over such a significant price level," said Cameron Hinds, regional chief investment officer at Wells Fargo Private Bank.

U.S. stocks, in the midst of a five-year rally, have surged in the final weeks of the summer after dipping earlier this month on concerns about geopolitical tensions in Russia and the Middle East.

The latest string of shattered market benchmarks comes as investors cheered new indications that the economy is strengthening, setting the stage for stronger company earnings.

Major U.S. indexes began in positive territory in premarket trading Tuesday. That trend held as investors began to digest the latest economic reports.

The Conference Board said Tuesday that its consumer confidence index rose this month to the highest point in nearly seven years. A separate report showed that orders of durable manufactured goods surged by a record 22.6 percent in July, thanks to a jump in aircraft sales. A third report showed U.S. home prices rose in June, although at a slower pace.

Stocks opened slightly higher and remained in the green the rest of the day. The S&P crossed above 2,000 points early on, and hovered at or above the mark as it approached the close of regular trading.

Moments before the close it dipped below 2,000, then inched up just above.

The S&P 500 (^GPSC) rose 2.10 points, or 0.1 percent, to end at 2,000.02. Seven of the 10 sectors in the S&P 500 index gained, led by energy stocks. Utilities declined the most.

The Dow Jones industrial average (^DJI) rose 29.83 points, or 0.2 percent, to 17,106.70. The Nasdaq composite (^IXIC) gained 13.29 points, or 0.3 percent, to 4,570.64.

The major U.S. indexes are riding a three-week streak of weekly gains and are up for the year.

The string of record highs this year isn't unusual when a market is recovering from a downturn, said Kate Warne, an investment strategist at Edward Jones.

In the past, once stocks have hit a new high after a downturn, they have continued higher for about two years, on average, she said. The first time the S&P 500 hit a new high after the financial crisis was March 2013. So this year's record run is still within the average range.

"Markets don't climb sharply. They tend to climb slowly, and that's probably good news for a continued climb in the future," Warne said.

The Dow also has put up some big numbers this year, notching 15 new closing highs. That trails the 30 it racked up by this time a year ago.

While the market is setting records, many stock watchers believe equities remain fairly valued, though not cheap.

The S&P 500 is trading around 16 times its forward-operating earnings, or over the next 12 months. The historical average on that measure is about 15 times.

"That says stocks are no longer cheap, but we also don't think they're expensive," Warne said. "Historically, when the price-earnings ratio has been in that range, returns over the next year have been around 7 percent. That's not bad."

Bond prices fell. The yield on the 10-year Treasury note rose to 2.39 percent. U.S. crude for October delivery rose 51 cents to $93.86 a barrel. In metals trading, gold rose $6.30 to $1,285.20 an ounce, silver rose three cents to $19.39 an ounce and copper fell three cents to $3.19 a pound.

Among the stocks making big moves Tuesday:
  • Amazon (AMZN) rose 2.3 percent after saying that it would buy video streaming company Twitch for $970 million. The stock climbed $7.81 to $341.83.
  • Best Buy (BBY) fell $2.19, or 6.8 percent, to $29.80 after the electronics retailer reported that its fiscal second-quarter net income plunged 45 percent as sales weakened.
  • Orbitz (OWW) fell 4.6 percent after American Airlines and US Airways disclosed they are pulling flight listings from the site because they have not been able to reach agreement on a long-term contract with the travel booking website operator. Orbitz shed 39 cents to $8.04.

What to Watch Wednesday:

These major companies are scheduled to release quarterly financial statements:
  • Tiffany (TIF)
  • Williams-Sonoma (WSM)
  • Donaldson Co. (DCI)
  • Michaels (MIK)
  • Chico's FAS (CHS)
  • Guess (GES)
  • Brown Shoe Co. (BWS)
  • Express (EXPR)

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Looks like WWIII is about to start...people are nuts and that is how wars begin !

August 27 2014 at 9:49 PM Report abuse rate up rate down Reply

The confidence is rising, because the war machine is in full swing. Nothing is better for the US economy than War, and the world is full of them right now.

August 27 2014 at 1:25 PM Report abuse rate up rate down Reply
worried man

Their value globally has soared from $25 trillion in March 2009. Stocks, which were valued at $63 trillion at their 2007 peak, have gained more than $2.2 trillion in value in just the past few weeks.

The market is way over valued so time to get out if you can. This will save many retirements if you can get out now.

August 27 2014 at 10:20 AM Report abuse +1 rate up rate down Reply

Way to go president Obama, it is a rough job cleaning up the mess of the bush/chaney administration. Now the republicans in office is complaining about the democrats, but their complaints are what the bush/chaney administration did in which they said nothing at the time.

August 27 2014 at 3:49 AM Report abuse +1 rate up rate down Reply

October will bring the true picture of the Scam when the Feds stop their bribery loans.

August 26 2014 at 9:16 PM Report abuse -2 rate up rate down Reply

Americans actually US own all the stock. It is not a 'market' it is a Casino economy where the betting is done by machines and the numbers hardly reflect anything positive unless you are in the one percent. It will crash again as it always does and then those of you with the phony 401K's (we used to have deferred pensions) will feel the pain. And the capitalists want you to believe that you should privatize the pensions due to the stock market. It is fraud, all accounting fraud and it will end

August 26 2014 at 8:28 PM Report abuse +3 rate up rate down Reply
1 reply to weilunion's comment
Jethro Vidal

It will only crash if you elect a Republican administration.
Can you tell me in the last 100 years when did it crash
under a Democratic administration? infact the last Democratic
administration left a surplus, and at the rate Obama is reducing
the deficit we will have a surplus by the time he leaves office.
The saying is a pox on both parties which I say is nonesense;
because when President Carter left office the deficit was 60 billion,
and the debt less than a trillion. Then 3 Republican President brought
the debt to 16 trillion, and on top of that the Bush administration
crashed the economy costing the American people over 16 trillion
in lost wealth. How in the world the Republican party is still in

August 27 2014 at 2:44 PM Report abuse rate up rate down Reply

A Market kept alive by free Fed money....over 50% is pure speculation

August 26 2014 at 7:30 PM Report abuse +1 rate up rate down Reply
1 reply to thefacts22's comment

The whole thing is a Ponzi scheme for the rich

August 26 2014 at 8:29 PM Report abuse +1 rate up rate down Reply
1 reply to weilunion's comment

Ponzi scheme? No. That's social security.

August 26 2014 at 9:12 PM Report abuse -1 rate up rate down