Dow, S&P set records as investors re-embrace technology stocks
NEW YORK — The stock market returned to record levels on Monday as investors regained their appetite for riskier stocks.
After beating down Internet and small companies for two months, investors decided that those stocks had fallen enough. Among the big gainers were Twitter and Facebook, which plunged in March and April. The Russell 2000, an index composed of small companies, climbed the most in two months.
Investors have been more cautious this year than last. They've favored big, less volatile stocks that pay rich dividends because of concerns about the outlook for the economy. Utility and energy companies have been among the beneficiaries of this trend and have outperformed the overall market in 2014.
While interest rates remain low, investors likely will keep getting drawn back into stocks after any sell-off, because holding cash isn't generating any returns, said Tim Courtney, chief investment officer at Exencial, an independent wealth management company.
“There is some bargain buying in some of the names that got hit hard in March and April,” Courtney said.
On Monday, the Standard & Poor's 500 index rose 18.17 points, or 1 percent, to finish at a record 1,896.65. The index last closed at a record on April 2, when it reached 1,890.90.
The Dow Jones industrial average gained 112.13 points, or 0.7 percent, to end at 16,695.47 Monday. The Dow's previous record was 16,583.34 on Friday.
The Nasdaq climbed 71.99 points, or 1.8 percent, to 4,143.86.
The Russell 2000 index rose 26.4 points, or 2.4 percent, to 1,133.65, its biggest gain since March 4. The index slumped nearly 10 percent from March 4 to May 9 as investors sold riskier stocks. The index remains down 2.6 percent for the year after surging 37 percent in 2013.
Gains on Monday were led by technology and industrial companies, sectors that are expected to benefit most if the economy starts growing faster.
Facebook rose $2.59, or 4.5 percent, to $59.83, reducing the stock's decline since March 10 to 17 percent. Twitter, another stock that has been beaten down recently, rose $1.89, or 5.9 percent, to $33.94.
Stocks also got a boost from some merger news.
Pinnacle Foods surged $4.02, or 13.2 percent, to $34.47 as the company agreed to be acquired by Hillshire Brands. Pinnacle's brands include Duncan Hines and Aunt Jemima, while Hillshire makes Jimmy Dean and Sara Lee products. Hillshire fell $1.19, or 3.2 percent, to $35.76.
Even though stocks have largely moved sideways for most of the year since a surge in 2013, investors are more concerned about missing the next leg of a rally than a market fall, said Doug Cote, chief market strategist, Voya Investment Management.
In government bond trading, prices fell. The yield on the 10-year Treasury note climbed to 2.66 percent from 2.63 percent on Friday.
Bond yields started falling at the start of the year as an unusually harsh winter put the brakes on the economy. They have continued to fall even as reports show the economy is strengthening again.
“There are a number of mysteries out there in the market,” said Gerry Paul, chief investment officer of U.S. value equities at AllianceBernstein. “To me, one of the biggest is why the 10-year Treasury is trading where it is.”
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Energy companies vie for experienced workers with skills in high demand
- Energy Spotlight: Adam Pope
- Energy-saving tactics pay off in Green Workplace Challenge
- Former athletes open businesses
- Auto review: Yaris has European flair, efficiency, affordability
- Password change can block hackers from wireless cameras
- Beaver County power plant cleaning up spill into creek
- Workarounds exist for battery woes
- Bank of New York Mellon 4Q earnings rise to $793 million, but revenue sluggish
- Typewriters back in style, keeping repair shops busy
- Hard-hit worker wonders where the economic resurgence is