U.S. Stocks Rally as S&P 500 Climbs to Highest Level Since 2008
By Lu Wang
Feb. 25 (Bloomberg) -- U.S. stocks rose this week, driving the Standard & Poor’s 500 Index to the highest level since 2008, after Greece got a bailout and better-than-expected data boosted confidence in the world’s largest economy.
Energy companies surged 1.9 percent, the most among 10 S&P 500 industries, as crude oil futures exceeded $109 a barrel. Sears Holdings Corp. rallied 25 percent, the most in the S&P 500, after announcing real estate sales and a rights offering. Technology companies in the stock index advanced an eighth straight week even as Hewlett-Packard Co. tumbled 10 percent. Procter & Gamble Co. added 2.8 percent after saying it will cut 5,700 jobs.
The S&P 500 added 0.3 percent to 1,365.74, the seventh gain in the past eight weeks. It exceeded last year’s high of 1,363.61 as a 24 percent rally since October restored $3.2 trillion to American equity values. The Dow Jones Industrial Average climbed 33.08 points, or 0.3 percent, to 12,982.95. The measure exceeded 13,000 for the first time since 2008.
“You’re seeing a whiz of optimism mainly because of a lack of negative news out of Europe and moderate growth in the U.S.,” Matt McCormick, who helps oversee about $5.1 billion at Bahl & Gaynor Inc. in Cincinnati, said in a phone interview. “This trend will continue until either of these two variables change.”
European finance ministers this week approved 130 billion euros ($175 billion) in aid for Greece by tapping into European Central Bank profits and coaxing investors into providing more debt relief to shield the region from a default. In the U.S., data showed applications for jobless benefits stayed at the lowest level since 2008, consumer confidence rose to a one-year high and purchases of new homes exceeded economists’ forecasts.
No 1% Losses
The S&P 500 has gone without losing 1 percent for 39 consecutive days, the longest streak since the 40 days through May 9, 2007, according to data compiled by Bloomberg. While the gauge surpassed last year’s peak set on April 29, its price- earnings ratio is 9 percent cheaper than it was then as profit growth outpaced stock prices.
Earnings topped analysts’ estimates at 68 percent of the 440 companies in the index that released results since Jan. 9. The S&P 500 trades at 14 times reported earnings, compared with a high of 15.4 in April and the average since 1954 of 16.4 times, according to data compiled by Bloomberg.
The lower valuation reflects lingering concern among investors over Europe’s debt crisis, according to Jeff Sica, who oversees $1 billion of assets as president of SICA Wealth Management in Morristown, New Jersey.
‘Quick to Sell’