Stock indexes hit new '03 highs
By Adam Shell
USA Today
NEW YORK — All three major stock indexes raced to 2003 highs yesterday, a trifecta that signifies broad market strength, many Wall Street experts say.
The bullish one-two punch of a report showing continued strength in the nation's factories and upbeat comments from analysts on the growth outlook for tech firms fueled the rally.
The ability of the Dow Jones industrial average, Nasdaq composite and Standard & Poor's 500 index to hit fresh 52-week highs simultaneously is a major accomplishment, analysts say.
"It's a sign of strength," says Price Headley, chief analyst at BigTrends.com. "You have to respect that (the market) doesn't want to go down."
In the arcane language of Wall Street, the trio of new highs is "technical" proof — or "confirmation" — that the rally that began in mid-March, and has pushed the S&P 500 up nearly 28 percent, is not ready to fade. It also could be signaling that stocks are ready to break out to higher ground after moving sideways most of the summer.
The last holdout was the broader S&P 500. It wasn't until yesterday that it was able to top its previous 2003 closing high of 1,011.66 set June 17. It also toppled its July 14 intraday high of 1,015.41. In contrast, the Nasdaq, which has notched 2003 highs the past four sessions, is trading at a 17-month high. After topping its Aug. 19 high, the Dow is at 15-month highs.
"It is evidence that the market continues to believe better times are ahead for the economy and corporate profits," says Jim Grefenstette, portfolio manager at Federated Investors.
Yesterday's stock gains were even more impressive, given that the yield on the 10-year Treasury note spiked to 4.6 percent, a 2003 high, on the economic news.
Many investors are diving back into stocks because they're growing increasingly confident that the rally is for real. The market's momentum and resulting jump in investor confidence becomes self-fulfilling, because money tends to chase performance.
"A lot of investors like the excitement of a breakout," says Andy Brooks, trader at T. Rowe Price, referring to a rise in prices that comes after a period in which stocks have traded in a tight range. "And when headlines say the new highs have been confirmed, it might give those people who have been reluctant to jump on board a little more courage to step in."
There are plenty of naysayers who point out that the market still faces obstacles. Potential roadblocks include: high prices relative to earnings, too much investor complacency and seasonal weakness. Since 1950, September has been the Dow's worst month.
