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US stocks rose yesterday, driving the Dow and the S&P 500 to close at record highs as the shares of 330 companies hit 52-week highs on the New York Stock Exchange.
The S&P 500 scored its third record closing high in a row while the Dow surpassed its previous record close on June 10. The blue-chip index hit an all-time intraday high at 16,978.02, coming close to the 17,000 mark.
For the week, the three major US stock indexes rose one per cent as investors brushed off geopolitical concerns about Iraq and focused on the Federal Reserve’s comments, indicating it will keep interest rates low for a long period of time.
The benchmark S&P 500 has gained for six consecutive days, supporting a cautious view that a near-term correction may be inevitable.
“I haven’t been concerned for weeks, but I’m becoming a bit concerned now with where the market is, especially with many indicators hitting levels that are con-
trary to the normal reading,” said Randy Frederick, managing director of active trading and derivatives for Charles Schwab in Austin, Texas.
The most notable indicators included the correlation of the CBOE Volatility Index .VIX, known as the VIX, with the S&P 500. The VIX usually moves inversely to the S&P 500.
The fear gauge is near its lowest since Feb-
ruary 2007 while the S&P 500 is at an all-time high. For the VIX to be near the lowest level in more than seven years while the S&P 500 is at a record high is causing concern that the market may be too complacent.
“I’m expecting not a big correction like ten per cent or so, but a good
three to four per cent adjustment next week won’t be a surprise,” Frederick said.
The VIX rose 2.2 per cent to close at 10.85, still well below its long-term average of 20.
Volume was higher than usual as yesterday marked a “quadruple witching” day—the expiration of stock options, index options, index futures and single-stock futures.
The Dow Jones industrial average .DJI rose 25.62 points, or 0.15 per cent, to end at 16,947.08. The S&P 500 .SPX gained 3.39 points, or 0.17 per cent, to 1,962.87. The Nasdaq Composite .IXIC added 8.71 points, or 0.20 per cent, to 4,368.04.
For the week, the Dow rose one per cent, the S&P 500 climbed 1.4 per cent and the Nasdaq gained 1.3 per cent.
About 7.2 billion shares changed hands on
US exchanges, well above
the average of 5.5 billion for the month to date, according to data from BATS Global Markets.
n Oracle Corp (ORCL.N) shares dropped four per cent to US$40.82 and ranked among the biggest drags on the S&P 500. The stock’s slide came a day after the software maker posted fiscal fourth-quarter results that disappointed investors looking for more progress against rivals selling web-based services.
n But CarMax (KMX.N) surged 16.5 per cent to
US$52.75. The stock was
the S&P 500’s best performer after the used-vehicle retailer reported first-quarter earnings that topped analysts’ expectations.
n RadioShack Corp (RSH.N) was among the 18 stocks that hit a 52-week low on the New York Stock Exchange yesterday. The stock hit a lifetime low, dropping into penny-stock territory for the first time on heavy volume. The stock fell 10.4 per cent to 92 cents.
n Volume was heavy after RadioShack’s stock fell under the threshold, with about 13 million shares exchanging hands, compared with its composite 25-day average of 3.9 million.