U.S. stocks rose on Tuesday, lifting the Dow to an all-time high and the S&P 500 to its first finish above 2,000, after better-than-expected reports — including a jump in orders for durable goods — cast favorable light on the U.S. economy.
The close above 2,000 gives Wall Street a “psychological lift,” said Hinds.Cameron Hinds, regional chief investment officer for Wells Fargo Private Bank in Lincoln, Neb.
“We’ve had a heck of a run, it’s been over three years since we’ve had a 10 percent correction, and the latest bout with weakness didn’t even get to a five percent correction,” Hinds added.
“There’s an expectation that times are good and are going to get better, and that this economy has legs,” said Brad McMillan, chief investment officer at Commonwealth Financial.
That said, “there is a lot of caution there; we just broke a big barrier. We failed to break over 2,000 a couple of times. If we don’t rise above it in a convincing way, that’s the market telling us” that investors are wary, said McMillan, who added that the outcome should become clearer in the next week or so as Wall Street professionals return from summer breaks.
“A few of the economic indicators have been pretty solid, which flows through to corporate profit,” said Hinds at Wells Fargo.
“Today’s report, while not perfect, reinforces market optimism regarding the economy,” emailed Dan Greenhaus, chief strategist at BTIG, of the data, which had orders for durable goods rising 22.6 percent last month versus a 7.5 percent estimate. The bookings for longer-lasting goods came on increased demand for commercial aircraft.
“As the third quarter gets underway, we stick to our expectation for three percent growth and with it, higher equity prices,” Greenhaus noted.
A measure of consumer confidence hit 92.4 in August, exceeding estimates of 89.
Another report had home prices rising at a slower rate in the year ending in June, with the S&P/Case-Shiller index of property values increasing 8.1 percent from June 2013.