Dow soars to highest in more than 5 years

STRONG reports on the US housing market and durable goods orders propelled stocks higher today, with the much-watched Dow index reaching its highest level in more than five years.

The Dow Jones Industrial Average rose 175.24 (1.26 per cent) to 14,075.37, reaching its best finish since October 12, 2007.

The broad-based S&P 500 rose 19.05 (1.27 per cent) to 1515.99, while the tech-rich Nasdaq Composite Index jumped 32.61 (1.04 per cent) to 3162.26.

The gains came after reports showed US pending home sales rebounded sharply in January to the highest level in almost three years.

Also, durable goods orders in January, excluding volatile aircraft, surged 1.9 per cent, with gains particularly strong in capital goods, suggesting business confidence in the economy in upcoming months.

Hugh Johnson of Hugh Johnson Advisers, said markets were also cheered by comments from Federal Reserve Chairman Ben Bernanke and European Central Bank President Mario Draghi that suggested accomodative monetary policy would remain in force on both sides of the Atlantic for the foreseeable future.

The market has also begun to conclude that mandatory US spending cuts due to take effect on Saturday "does not mean the end of the world", Mr Johnson said. "The recognition is that the economy will continue to expand in 2013 and 2014."

All but one of the blue-chip companies in the Dow Jones index closed the day higher.

Among the biggest gainers were JPMorgan Chase, which rose 3.5 per cent after announcing it would trim 19,000 jobs by the end of 2014.

Also gaining was aerospace giant Boeing (up 2.3 per cent), industrial giant Caterpillar (up 2.6 per cent) and technology giant Microsoft (up 1.6 per cent).

Travel website Priceline.com picked up 2.8 per cent after reporting significantly higher profits than a year ago.

Upscale handbag maker Coach jumped 2.8 per cent on speculation that the company could be an acquisition target.

Target declined 1.5 per cent despite reporting earnings that bested analyst expectations. However, the market reacted to comments that the company faces "a highly promotional retail environment and continued consumer uncertainty".

Bond prices fell. The yield on the 10-year bond rose to 1.90 per cent from 1.88 per cent yesterday, while the 30-year rose to 3.10 per cent from 3.08 per cent.

Bond prices and yields move inversely.

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Shares highest since Sept 08

THE Australian share market has reached a fresh four and a half year high. Picture: File Source: Supplied

THE Australian share market has reached a fresh four and a half year high, buoyed by improved investor sentiment towards the Italian election outcome.

At the close on Thursday, the benchmark S&P/ASX200 index was up 67.5 points, or 1.34 per cent, at 5,104.1.
The index reached an intraday high of 5112.5 minutes before closing time, touching the highest level reached since September 2008.

The broader All Ordinaries index was up 67.3 points, or 1.33 per cent, at 5,120.4.

On the ASX 24, the March share price index futures contract was 66 points stronger at 5,087 with 32,850 contracts traded.

IG Markets dealer Chris Weston said the Australian market followed Wall Street higher after an Italian bond auction posted strong results.

"We saw a much improved Italian bond auction, which gave a green light to traders globally to buy stocks in the face of a dark political situation there," he told AAP.

"There's no reason why this market can't keep going higher."

The big four banks benefited, with the Commonwealth Bank closing $1.26, or 1.91 per cent firmer, at $67.27 and Westpac adding 57 cents, or 1.89 per cent, to $30.77.

National Australia Bank put on 17 cents to $30.20 and ANZ gained 44 cent to $28.72.

Supermarket giant Woolworths was closed 92 cents higher at $34.93 after announcing a first half net profit rise of 19 per cent to $1.15 billion.

Retailer Harvey Norman added 21 cents, or 9.21 per cent, to $2.49 despite a 36 per cent drop in half year profit from weaker sales and falling property values.

Mr Weston said the strong performance of the discretionary sector boosted investor confidence in Harvey Norman, as it forecast strong sales growth.

"The discretionary sector's clearly the best performing sector this year," he said.

"It's been ages since we've seen any positive rhetoric coming from that company."

The spot price of gold in Sydney at 1620 AEDT was $US1,597.10 per fine ounce, down $US13.07 from Wednesday's local close of $US1,610.17 per ounce.

National turnover was 2.24 billion securities worth $7.13 billion, with 603 stocks up, 423 down and 352 steady.
 

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