The Dow Jones industrial average held on to its record high intraday level on Tuesday in midday trading, and appears set to end the day with a new record close – reflecting the dramatic turnaround in the stock market almost four years to the day after it hit a bear-market low.
The Dow was up 146 points or slightly more than 1 per cent, to 14,274 – comfortably above its peak was on Oct. 9, 2007, when it closed at 14,149.15. From its bear-market low in March 2009, the Dow has risen nearly 118 per cent, no doubt raising thoughts about how far this bull market recovery can go.
The S&P 500 also rallied on Tuesday, but remained about 1.6 per cent shy of its peak. It was up 16 points or 1.1 per cent, to 1542.
In Canada, the S&P/TSX composite index was up 95 points or 0.8 per cent, to 12,803. By comparison to U.S. indexes, the TSX has lagged: It remains 16 per cent off its record high in 2008.
The decisive gains on Tuesday follow what had been a flirtation with the Dow’s record in previous sessions. The blue-chip index came close last Thursday, only to slump in afternoon trading and end the day in the red. Since then, it has risen for three straight days.
The latest jump follows an upbeat reading on U.S. service sector activity. The ISM non-manufacturing index rose to 56 in February, up from 55.2 in January and ahead of economists’ expectations.
More broadly, investors have looked beyond a recent flareup of the European sovereign-debt crisis that followed Italian elections, concerns that the Federal Reserve is rethinking its economic stimulus policies and the impact of broad spending cuts related to the political impasse in Washington.
In Europe, stocks also rallied: The U.K.’s FTSE 100 rose 1.4 per cent and Germany’s DAX index rose 2.3 per cent.
The gains on Tuesday were also broad: 27 of the 30 stocks in the Dow were up, led by Hewlett-Packard Co., Cisco Systems and Bank of America Corp.
Within the S&P 500, all 10 subindexes were higher. Technology stocks showed the biggest gains, rising 1.7 per cent – helped out by a 3.3 per cent rally by Apple Inc. Industrials rose 1.6 per cent, financials rose 1.1 per cent and telecom stocks rose 1 per cent.
In Canada, materials rose 1.1 per cent, consumer discretionary stocks and energy stocks rose 0.7 per cent each and financials rose 0.6 per cent.