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Last updated: March 5, 2013 9:17 pm
Technology stocks were the best performers on Wall Street, sending the S&P 500 information technology subgroup up 1.5 per cent on Tuesday.
Shares in Apple, the heaviest weighted stock in both the S&P 500 index and Nasdaq Composite, rallied 2.65 per cent to $431.17, recovering losses from the previous session. The iPhone-maker has grappled with instilling confidence in investors after disappointing fourth-quarter results as well as recent questions and criticism about its $137bn cash pile.
Shares in Hewlett-Packard rose 2 per cent to $20.37 after International Shareholder Services, an influential proxy advisory firm, advised shareholders to vote against the re-election of Ray Lane as chairman and of two other directors over their mishandling of the Autonomy purchase. The stock has gained 43 per cent year to date.
Google attracted buyers, adding 2.1 per cent to $838.68, its highest level since going public.
Overall, US equity markets rallied on Tuesday, helping the Dow Jones Industrial Average to close at a record high.
The Dow, which tracks 30 blue-chip stocks, finished 0.9 per cent higher at 14,253.77, breaking the previous record level reached in 2007.
Meanwhile, the S&P 500 index rose 1 per cent to 1,539.80 – only 16 points off its all-time high reached in 2007, with the broad-based gains led by information technology and industrial stocks.
The technology-heavy Nasdaq Composite added 1.3 per cent to 3,224.13 – its highest level in more than 12 years.
Risk appetite returned to stock markets as investors bet on continued monetary stimulus from central banks. Federal Reserve policy-maker Janet Yellen on Monday reiterated the support for a continued asset-purchase programme, saying economic growth was much lower than its potential.
Positive data from the Institute of Supply Management on services sector activity boosted equities further. The ISM non-manufacturing index rose to a higher-than-expected level of 56, indicating strength in new orders.
Tobias Levkovich, US equity strategist at Citigroup, said better economic trends supported a constructive outlook.
“Despite share prices being near all-time highs, positive dynamics such as ISM, employment numbers, housing recovery, energy drilling activity, durable goods order strength, improved credit conditions, attractive valuation and low earnings growth expectations argue for market strength,” he said.
Jerry Webman, chief economist at OppenheimerFunds, echoes such sentiment: “Equities were held back by political scepticism, but now markets realise it is about earnings. The fourth-quarter season showed that companies were profitable not because of cost cutting, but they also grew revenues, even in tough times.”
Shares in defence companies recovered some ground after being sold off during the previous session amid fears that federal cuts due to sequestration would hit profits in these companies.
JC Penney shares continued their slide from the previous session following news reports on Monday after the market close that Vornado Realty Trust sold a block of 10m shares. The stock in the troubled department store chain fell 10.3 per cent to $15.01 and has lost more than 60 per cent of its market value in the past 12 months.
Shares in Vornado Realty Trust rose 3.4 per cent to $84.11.
Walgreens shares were hit after its comparable sales for February disappointed investors. Same-store sales fell 0.6 per cent last month, while analysts were expecting a rise of 2.5 per cent. Shares fell 2.5 per cent to $40.72.
Apollo Group, the education company which owns Phoenix University, rallied 3.1 per cent to $16.70 after receiving an upgrade to “buy” from “sell” from Deutsche Bank.
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