We witnessed yet another record close, like mergers, spin-offs, takeovers, splits and a wall of money drove the NASDAQ higher — again. Investors scrambled to load up on the hot sectors of telecom and technology in heavy trading. Blue chips eked out a small gain, keeping the three-day rally alive on more economic news that indicates the U.S. economy is white-hot.
U.S. manufacturing grew at its fastest pace in four months, according to reports out today, while prices paid by factories continued to rise, igniting fears that the Fed will be aggressive on the interest rate front. The National Association of Purchasing Management said its index of economic activity rose to 56.9 in February from 56.3 in January. The February level was slightly above the 56.5 that economists had forecast. Meanwhile, construction spending increased 2.7 percent in January in the U.S., the biggest increase in nearly two years, according to the Commerce Department.
“These reports are a problem, as they provide additional ammunition for the inflation hawks and may prompt the Federal Reserve to raise interest rates” several times this year, Michael Manns, a senior portfolio manager at American Express Financial Advisors, told Bloomberg.
The Dow Jones Industrial Average rose 8.07 points to 10,136.38 while the Nasdaq Composite jumped 86.10 points to 4,782.79. Trading on the NYSE was heavy, as 1.27 billion shares changed hands. Advancing stocks outpaced decliners by about eight to seven. The S&P 500 index rose 12.64 to 1,379.06. Benchmark 30-year Treasury bonds fell 7/32 to yield 6.15 percent. Gold fell $0.10 to $294.00 per ounce.
The dollar fell against most major currencies and finished sharply lower against the yen. Reuters reported that Japanese fund managers are moving money out of the U.S. market back into Japan.
Crude oil prices surged $1.27 to $31.70 per barrel on news of a further decline in oil inventories by the American Petroleum Institute, offsetting reports that Saudi Arabia, Venezuela, and Mexico will propose that the Organization of Petroleum Exporting Countries increase output by 1.2 million barrels per day in April. Oil services stocks surged, as the Philadelphia Oil Services index (OSX) jumped six percent.