The Nasdaq composite index is viewed in Times Square on April 23, 2015 in New York.Spencer Platt/Getty Images
The Nasdaq composite index closed at a record, after the biggest drop for U.S. stocks in three weeks, as technology shares rebounded and investors watched for progress in talks on Greece.
The Nasdaq rose 1.5 per cent to 5,106.59, topping its previous all-time closing high set on April 24, as semiconductors jumped the most in two months and Apple Inc. rallied. The Standard & Poor's 500 index added 0.9 per cent to 2,123.48, nearly reversing a 1-per-cent sell-off on Tuesday.
"You've got a couple company-specific moves, but the big picture is just kind of a combination of this Greece headline bouncing off of [Tuesday's] move," said Michael Antonelli, an institutional equity-sales trader and managing director at Robert W. Baird & Co. "As tiresome as it is, it's Greece and the Fed. Those are the two things the market is concerned about right now."
Stocks were lifted earlier after a Greek government official with knowledge of the matter said Greece and its creditors have started crafting a staff-level accord to solve its debt crisis. He added that disagreement between creditor institutions remains a problem. European Commission Vice-President Valdis Dombrovskis, who is in charge of euro matters, later denied a Greek government statement that a deal is close with international creditors.
The S&P 500 fell Tuesday as better-than-forecast data and comments by U.S. Federal Reserve officials bolstered the case for a rate increase. The Chicago Board Options Exchange volatility index jumped 16 per cent, only the second move all year to exceed 15 per cent. By comparison, the VIX surpassed that four times in December.
"There is kind of a continual theme here of the market struggling to be able to sustain anything either up or down," said Jim Paulsen, the Minneapolis, Minn.-based chief investment strategist at Wells Capital Management Inc., which oversees $347-billion (U.S.). "It's been a very narrow range here. It has broken out to marginal new highs along the way, but it hasn't really been able to sustain an advance."
Fed policy makers preparing to raise rates that they've held near zero since December, 2008, are working to engineer a smooth tightening and avoid the volatility spurred by the so-called "taper tantrum" that roiled global markets, and sent the VIX soaring more than 50 per cent in the late spring of 2013.
Fed vice-chairman Stanley Fischer said Tuesday that policy-makers will consider global growth as they begin to raise interest rates, and that they could increase borrowing costs more gradually should the world economy falter.
Investors will watch reports on housing and consumer sentiment later this week for further clues on the timing of the rate increase. An estimate on Friday may also show the U.S. economy contracted in the first quarter, compared with a prior reading showing growth. Economists expect the Fed to raise borrowing costs in September, according to a Bloomberg survey.