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S&P 500 closes at new record high

TradingPub Admin | July 11, 2013

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The S&P 500 Index, a benchmark group of stocks, closed at a new all-time high on July 11. 

The positive sentiment that helped to push these equities to this new record level managed to overcome the impact of a Labor Department report, which indicated that the number of initial applications for unemployment benefits unexpectedly increased, according to MarketWatch. 

Impact of jobless claims report
This data provided by the government agency indicates that during the prior week, these applications surged to 360,000, which represented an increase of 16,000 from the prior period and the highest figure in two months, the media outlet reports. 

This data was released after the Labor Department provided far stronger figures for employment growth in June, indicating that a total of 195,000 of these positions were created during the period. In addition, the government agency revised its figures for April and May, specifying that the nation's employers created close to 200,000 jobs during each of these months. 

"The three-week moving average is still around 350,000, so we still have bumpy but steady improvement," stated Art Hogan, market strategist at Lazard Capital Markets. "Also, July has a boatload of seasonality in it," he said in reference to the summer downtime experienced by some manufacturing facilities, as well as holidays. 

Global investors change tone
The changing mindset of investors, which has represented a shift to optimism as opposed to risk aversion, was also noted by Hank Smith, who manages $7 billion as chief investment officer at Haverford Trust Co., which is based in Radnor, Pennsylvania, according to Bloomberg. 

"The story in stocks for this year is about confidence replacing uncertainty and anxiety," Smith told the media outlet via telephone. "It's really more about an improvement in sentiment. That's being a big driver for equity returns and we are still a long ways away from worrying about there being too much optimism or exuberance." 

S&P 500 rebounds
The benchmark index has surged more than 3 percent since July 2, Reuters reports. The session on July 11 was the sixth in a row where the S&P 500 increased in value. These gains have happened after U.S. stocks experienced a sharp sell-off in the last few months, plunging 5.8 percent between its previous record close of 1,669.16 on May 21, and the end of trading on June 24. 

Markets responded dramatically to comments made by Federal Reserve Chairman Ben Bernanke, who stated that it was possible that quantitative easing would be reduced starting in 2013, and then eliminated entirely the following year. 

However, Bernanke has since changed his tone, emphasizing the need for robust improvement in the labor market before these asset purchases are reduced or stopped completely, according to the news source. On July 10, the Fed chief stated that QE would be required "for the foreseeable future," according to Bloomberg. 

The key importance of Bernanke's statements to the global asset markets was noted by Malcolm Polley, who manages $1.1 billion as chief investment officer at Indiana, Pennsylvania-based Stewart Capital Advisors LLC, the media outlet reports. 

"Everybody's hanging on the Fed's every word," he stated. 

Importance of earnings
In addition to the importance of Labor Department data and the statements surrounding the future of QE, another key factor that has helped influence equities is speculation related to the earnings provided by major companies, according to Reuters. 

During this period, the profits reported by these large firms should rise 2.5 percent from the same time in 2012, according to analyst data compiled by Thomson Reuters and reported by the media outlet. In addition, these market experts have projected a 1.5 percent increase in revenue. 

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