The Standard & Poor’s 500 Index rose to a record, after posting the longest streak of quarterly gains since 1998, as technology and consumer shares rallied while data showed China’s manufacturing expanded in June.
International Business Machines Corp. (NYSE:IBM) climbed 2.7 percent, leading technology stocks in the S&P 500. General Motors Co. (NYSE:GM) jumped 2.7 percent after posting a surprise increase in U.S. sales. Netflix Inc. (NASDAQ:NFLX) advanced 6.1 percent after Goldman Sachs Group Inc. recommended investors buy shares in the world’s largest Internet-subscription service. Urban Outfitters Inc. (NASDAQ:URBN) dropped 1.9 percent after Wedbush Securities Inc. cut the stock’s rating to the equivalent of hold.
The S&P 500 climbed 0.7 percent to a record 1,973.98 at 11:44 a.m. in New York. The benchmark equity gauge rose 4.7 percent in the second quarter, a sixth consecutive increase. The Dow Jones Industrial Average increased 135.05 points, or 0.8 percent, to 16,961.65, poised for a record close. The Russell 2000 Index of smaller companies rallied 1.3 percent, heading for an all-time high.
“The market is very resilient,” Steve Krawick, president of West Chester Capital Advisor Inc. in Johnstown, Pennsylvania, said in a phone interview. The firm oversees about $900 million. “We had some crisis in Ukraine and the Middle East, but our economy has been stable. We didn’t have a correction when the market had the opportunity to correct in March. We realize the fact that valuations are not cheap, but that doesn’t translate into the end of the bull market.”
Stocks are extending a rebound from the selloff that started in March with small-cap and Internet stocks. Equities have rallied since the S&P 500 reached a two-month low in April as stimulus spread from Europe to Japan and the U.S. and economic data suggested global growth is strengthening. The Russell 2000 is trading above its March 4 record close, retracing all of its losses after a 9.3 decline through May 15.
Manufacturing in China expanded in June by the fastest pace this year, a purchasing managers’ index compiled by the government showed today. A similar gauge from HSBC Holdings Plc and Markit Economics rose to 50.7 from 49.4 in May.
The Institute for Supply Management’s U.S. factory index was little changed at 55.3 in June from 55.4 in the prior month, the Tempe, Arizona-based group’s report showed. Readings above 50 indicate expansion. The median forecast of 88 economists surveyed by Bloomberg called for 55.9.
Other reports this week may yield further clues on the strength of the U.S. economy. A private release may show U.S. employers hired more workers in June than in the previous month. The official jobs data is due Thursday, a day before the U.S. Independence Day holiday.
U.S. equities have reached all-time highs, with the S&P 500 gaining 6.8 percent this year, as data from employment to housing fueled confidence that the U.S. economy is rebounding after the worst contraction in gross domestic product since 2009. Federal Reserve Chair Janet Yellen said on June 18 that accommodative monetary policy, rising property and equity prices and the improving global economy should lead to above-trend growth.
The S&P 500 trades at 16.7 times the projected earnings of its members, its highest valuation in four years. The U.S. market has gone more than two years without a 10 percent drop.