Dow Jones and S&P 500 Index at All-Time Highs

On Wall Street, the Dow Jones and S&P 500 Index reached new all-time highs on Thursday, thanks to better-than-expected data from the U.S. economy.

The Dow Jones strengthened by 128 points, or 0.83 percent, to 15,628 points, while the S&P 500 rose by 1.25 percent to 1,706 points, and the Nasdaq Index increased by 1.36 percent to 3,675 points, the highest level in 13 years.

The breakthrough of the S&P 500 Index above the 1,700-point level, for the first time in history, is attributed to rising stock prices in all 10 sectors of the index. Prices rose the most in sectors related to economic growth, such as financial, industrial, and technology.

The positive sentiment is due to investor confidence after the Fed indicated on Wednesday that the economy still needs support, and therefore will continue to implement programs for purchasing government and mortgage bonds.

In this way, the U.S. central bank injects $85 billion of fresh, cheap money into the financial markets each month, which has long been driving stock price growth.

The Fed will maintain its loose monetary policy until the economy is firmly on the path to recovery. After it was announced on Wednesday that U.S. economic growth accelerated in the second quarter from 1.1 percent in the previous quarter to 1.7 percent, new encouraging macroeconomic data was released yesterday.

The Institute for Supply Management (ISM) reported that its factory activity index in the U.S. jumped from 50.9 to 55.4 points in July, the highest level in two years.
“GDP data confirmed estimates that economic growth accelerated in the second quarter, and the strengthening of the ISM index in many areas shows that the situation is further improving. This is the main reason for the rise in stock prices,” says Brian Amidei, a director at HighTower Advisors.

It was also reported that the number of initial claims for unemployment benefits fell by 19,000 last week to 326,000, the lowest level since January 2008, indicating a recovery in the labor market.

In addition to the Fed, the European Central Bank will also continue its loose monetary policy. Its president, Mario Draghi, stated yesterday, after the ECB leaders’ meeting, that key interest rates in the eurozone will remain at their current record low levels for an extended period.
Thanks to this, stock prices also significantly rose on European exchanges yesterday. The London FTSE index strengthened by 0.92 percent to 6,681 points, while the Frankfurt DAX rose by 1.63 percent to 8,410 points, and the Paris CAC increased by 1.25 percent to 4,042 points.