US stocks soar to fresh heights

NEW YORK: US stocks soared to fresh heights once again this week, notching new landmarks amid solid economic data, loose monetary policy and, above all, buoyant sentiment.

The week concluded with a one-two bang on Thursday and Friday, with two of the three leading indices closing above psychologically important benchmarks for the first time.

The Dow Jones Industrial Average on Thursday recorded its first-ever close above 16,000 and ultimately ended the week at 16,064.77, up 103.07 (0.65 per cent).

The Dow has closed at new records 41 times in 2013, according to data from SandP Dow Jones Indices.

Then on Friday, the broad-based SandP 500 reached a new peak of its own, finishing above 1,800 for the first time at 1,804.76, up 6.58 (0.37 per cent) for the week.

Both the Dow and SandP 500 have now posted gains for seven weeks in a row.

The tech-rich Nasdaq Composite Index was outshone by the other two indices, gaining just 5.68 (0.14 per cent) at 3,991.65.

However, Nasdaq is close to crossing 4,000 for the first time in more than 13 years.

The week's trade showed investors are not completely devoid of anxiety.

Comments by activist Carl Icahn warning of a potentially big drop in stocks sent them lower Monday and came as some other analysts have warned of a correction.

Shares sold off Wednesday after Federal Reserve minutes said the Fed could soon scale back its bond-buying programme.

But the overall mood of the market remains fairly giddy, with many analysts seeing little in the horizon to threaten stocks.

"There's not a lot of negative news to slow stocks," said Sam Stovall, chief investment strategist at Standard and Poor's Capital IQ. "Little by little, people are throwing in the towel, meaning they are joining in on the rally."

"The trend is still in place," said Michael James, managing director of equity trading at Wedbush Securities. "The market has had a very strong year, and with six weeks to go, I don't anticipate that changing. Any pullback is likely be shallow and short-lived."

Bill Lynch, director of investment at Hinsdale Associates, attributed this week's gains to the solid economic data, including a better-than-expected report on October retail sales and the lowest weekly jobless claims count in two months.

But Scott Wren, senior equity strategist at Wells Fargo Advisors, said the bigger factor was confidence that the US Federal Reserve will not scale back its bond-buying programme too quickly, especially with the likely confirmation of Janet Yellen to the top spot.

"What's driving it is the Fed's not going to do anything to rock the boat," Wren said.

The week's corporate news was dominated by a stream of earnings reports from retailers. Home Depot was a standout, raising its earnings forecast for the third quarter in a row on the improving housing market.

But several retailers signaled that the push to lure in customers during the crucial holiday shopping season would likely crimp profits.

Best Buy chief financial officer Sharon McCollam said the electronics chain would compete aggressively on price.

"If our competition is in fact more promotional in the fourth quarter, we will be too and that will have a negative impact on our gross margin," she said.

Ross Stores, another retailer, gave a fourth-quarter earnings forecast that disappointed the market and said it expected the upcoming holiday shopping season to be the "most intensely competitive and promotional selling period in recent years." 

JPMorgan Chase also made headlines when it agreed to pay US$13 billion to settle a litany of federal and state lawsuits that alleged that the bank misled investors with the sale of risky mortgage securities that were billed as safe investments.

Regulators said they expect more big bank settlements over similar charges in the months ahead.

Analysts say volatile trade is possible next week given that trading volumes will likely be light due to the Thanksgiving holiday.

There are a handful of important economic reports in the first half of the week, including consumer confidence, durable goods orders and the Case-Shiller index of home prices