By Chris Dieterich
A four-day rally for U.S. stocks carried the S&P 500 index
to a fresh record on Thursday after a series of upbeat economic
reports.
The S&P 500 added 5.86 points, or 0.3%, to 1992.37, its 28th
record finish of 2014 and first since July 24.
This week's rally comes ahead of key speeches by Federal Reserve
Chairwoman Janet Yellen and European Central Bank President Mario
Draghi in Jackson Hole, Wyo., on Friday. Investors will be looking
for clues as to the timing of any interest rate increase in the
U.S. and the potential for additional easing efforts in Europe.
The Dow Jones Industrial Average rose 60.36 points, or 0.4%, to
17039.49. The Dow industrials remain 0.6% below their July 16
record of 17138.20.
The Nasdaq Composite Index rose 5.62 points, or 0.1%, to
4532.10, its highest close since March 2000.
Recent gains cap a market rebound from a brief a swoon in July,
when a 1.5% drop for the S&P 500 halted a five-month winning
streak. Concerns about global turmoil, valuations and changes to
central bank policy dragged on stocks, but buyers have been quick
to step back in the market.
Dan Kozlowski, portfolio manager of the $4.3 billon Janus
Contrarian Fund, said that he has been able to find stock ideas
even though fast gains have made the market pricier.
That fund has added to stock holdings over the course of this
year when his favorite stocks were swept up "unduly" by
geopolitical concerns, he said.
"Opportunities are playing out even while the macro swirls,"
said Mr. Kozlowski, whose fund has topped the S&P 500's
performance each year since 2011.
Traders said volumes have been light during the recent run-up
ahead of Friday's full day of speeches from central bankers.
Thursday's composite stock-trading volume was the second lowest
full session of the year.
New signals about policy from either Ms. Yellen or Mr. Draghi
would likely determine the trajectory of global markets in the
weeks ahead, said Tyler Mordy, president and co-chief investment
officer at Toronto's Hahn Investment Stewards, which manages nearly
$500 million in exchange-traded funds.
Fed officials are grappling with whether the economy is strong
enough to stand without stimulus. Most observers expect the Fed to
stick to its plan to finish its monthly stimulus in October and
raise interest rates starting next year, and confirmation of this
view by Ms. Yellen could propel stocks further.
Mr. Mordy said that the speech from Mr. Draghi could have the
greatest impact on the market since the ECB's "policy arsenal" is
deeper to address the continent's flagging economy.
"There is a greater element of surprise" from the ECB, Mr. Mordy
said.
Shares of financial firms led the way Thursday after Bank of
America Corp. agreed to pay $16.65 billion to settle the
government's accusations it sold flawed mortgage securities in the
run up to the financial crisis. Shares added 4.1%.
The stock market's gains followed a report showing that
applications for unemployment benefits fell more than expected last
week. Separately, sales of previously owned homes rose in July to
their highest level since September.
Markit's "flash" manufacturing purchasing managers index rose to
the highest level since April 2010, while a survey of mid-Atlantic
manufacturers for this month registered its highest reading in more
than two decades.
A steady stream of upbeat economic reports, which rebounded
after a slow start to the year, leaves investors optimistic about
profits of U.S. corporations.
"The ultimate driver of stocks is what companies will earn,"
said Seth Masters, chief investment officer at Bernstein Global
Wealth Management, which oversees $74 billion, who has kept an
outsize position in stocks since 2012. "There's nothing right now
that indicates a recession is even on the radar screen."
European stocks shrugged off some patchy economic data Thursday,
with the Stoxx Europe 600 index up 0.7%. The gains came despite a
sharper-than-expected slowdown in euro-zone business activity.
Asian stocks finished mixed Thursday, with Chinese shares
falling after data showed Chinese manufacturing activity down at a
three-month low. The Hang Seng closed off by 0.7%, while the
Japan's Nikkei added 0.9%.
Gold futures fell 1.5% to settle at $1,273.70 a troy ounce.
Crude-oil futures added 0.6% to $93.96 a barrel. The dollar fell
versus the euro but rose against the yen. Yields on benchmark
10-year U.S. Treasury notes fell to 2.408%, down from 2.426% late
on Wednesday.
Hewlett-Packard Co. added 5.4% after the technology company's
third-quarter profit beat analyst estimates late Wednesday.
Hormel Foods Corp. rallied 4.3% after the company's earnings
jumped 21%, as the packaged-foods maker reported strong profit
gains and higher sales in its refrigerated-foods and Jennie-O
Turkey Store segments.
Write to Chris Dieterich at chris.dieterich@wsj.com