Dow, S&P 500 notch record closing highs
A little rally went a long way Monday, when two of the three major market measures ended at record highs -- showing that the long-running U.S. bull market in stocks still has a lot of spunk.
The Dow Jones industrial average rose 26.32 points, a move that would normally barely be worth noting but today was enough to push it to a new record close of 18,298.88. That barely topped the old high of 18,288.63 set on March 2.
The Standard & Poor's 500 index continued its winning ways, with the broad market benchmark rising 0.3% to 2129.20 for its third consecutive record closing high.
The Nasdaq composite had the day's biggest gain of the big three U.S. indexes, rising 0.6% to 5078.44 -- just shy of its record close of 5092.09 three weeks ago.
STOCKS:Live markets blog
CAUTION:Despite new highs, stock bulls remain wary
The market's latest lift-off is due in large part to the idea that a coming interest rate hike from the Federal Reserve will likely come later this year, coupled with companies continuing to buy back their own shares and use cash to other acquire companies, according to Quincy Krosby, market strategist at Prudential Financial.
"Mergers and acquisitions, coupled with share buyback announcements have served as positive catalysts," she says. "Moreover, the stream of economic data has been weaker than expected, pushing out the date of interest rate liftoff. "
The risk: if employment strength gives way, undermining the economy's weakness following a harsh winter, she adds.
"If employment figures fail to maintain a positive trajectory, investors would begin talking about a possible recession, something that would lead to a re-pricing of the market----that is, a significant sell off," Krosby warns.
For now, Wall Street is simply relieved that a rate hike isn't coming in June and first-quarter earnings didn't contract as feared at the start of April, adds Sean Lynch, co-head of Global Equity Strategy for Wells Fargo Investment Institute.
"The recent action in the market confirms that earnings successfully stepped over the low hurdle that was set for them in the first quarter and we feel comfortable that the Fed remains on hold until the latter half of the year," says Lynch. "This is a nice backdrop for the equity market."
Seven of the 10 S&P 500 sectors were higher with telecom and health care leading the way.
The yield on the 10-year Treasury note rose to 2.23% from 2.15% Friday.
In merger and acquisition news:
• Ascena Retail Group (ASNA) bought Ann Inc., the parent company of Ann Taylor and Loft retail chains, for about $2.16 billion. Shares of Ann (ANN) surged 19.9% and Ascena fell 1%.
• In the most recent pharmaceutical deal, Endo International (ENDP) is buying Par Pharmaceutical Holdings in an $8.05 billion deal to expand its generics business. Shares of Endo fell 5.4%.
European shares were higher Monday. Germany's DAX was up 1.3%, Britain's FTSE 100 added 0.1% and France's CAC 40 gained 0.4%.
In Asia, Japan's Nikkei 225 index rose 0.8% and Hong Kong's Hang Seng index dropped 0.8%. The Shanghai Composite fell 0.6%.
On Friday, the S&P 500 inched up to set a new closing high for a second straight day as stocks closed mixed.
Contributing: Associated Press