NEW YORK: US stocks closed out a buoyant February with a fresh record for the S&P 500 as bullish sentiment dominated trade despite mediocre economic data and rising tensions over Ukraine.
The S&P 500 was the week’s star, notching consecutive records on Thursday and Friday and finishing up 23.2 points (1.26 per cent) at 1,859.45.
The Dow Jones Industrial Average rose 218.41 (1.36 per cent) on the week to 16,321.71, while the tech-rich Nasdaq Composite Index tacked on 44.71 (1.05 per cent) to 4,308.12.
For the month, the Dow jumped 3.97 per cent, its biggest monthly gain since January 2013. The S&P 500 increased 4.31 per cent in February, while the Nasdaq powered up 4.98 per cent.
Investor enthusiasm returned in February after the Dow fell by 5.3 per cent in January.
“The US is the place to be in terms of stocks,” said Scott Wren, senior equity strategist at Wells Fargo Advisors.
Wren this week bumped up his year-end 2014 forecast for the S&P 500 on expectations of “modest” yet “dependable” growth in the US.
“Sentiment is positive. But what you worry about is if the market becomes much overvalued and there’s widespread optimism that borders on euphoria,” said Hugh Johnson, chairman of Hugh Johnson Advisors.
“That’s a combination that usually signals we’re near the end, and I don’t see that.”
The week’s gains underscored the strong appetite for stocks even as tensions rose over Ukraine, said Gregori Volokhine, president of Meeschaert Capital Markets in New York.
Volokhine described the Ukraine situation as potentially “explosive geopolitically” because of the possibility the US could take “economic action” against Russia.
“Such huge tensions are never good for markets,” Volokhine said.
Investors also shrugged off another round of mostly disappointing economic data that included a big reduction in the Commerce Department’s estimate for fourth-quarter economic growth to 2.4 per cent from the prior estimate of 3.2 per cent.
Yet analysts said investors view the GDP data and other weak indicators as partly the result of extremely cold weather that has depressed economic activity.
US Federal Reserve Chair Janet Yellen took this stance, telling a Senate panel that unseasonably cold weather has played some role in much of lackluster economic statistics over the last four to six weeks.
Analysts said Yellen’s testimony confirmed that while the Fed continues to scale back its stimulus program, it has no intention of raising interest rates anytime soon.
Yellen “restated that the Fed is very likely to keep interest rates at a very low level for the foreseeable future,” said Johnson.
Major corporate news in the week included earnings reports from leading retailers Best Buy, Macy’s and Home Depot, all of which rallied following the releases.
One of the most anticipated reports came from Target, which in December disclosed that credit card data for some 40 million customers had been stolen by hackers in one of the biggest data breaches in history.
Target said fourth-quarter earnings fell 45.9 per cent on lower consumer traffic after it disclosed the breach. It also warned 2014 earnings could be hit by costs from the data breach. Yet Target shares also rallied following the report on relief it was not worse.
Shares of another problem-plagued retailer, J.C. Penney, also soared after projecting that it would see “mid-single-digit” growth in same-store sales for 2014.
Ripples from several high-profile shareholder activist battles also garnered headlines. Billionaire Carl Icahn engaged in an escalating war of words with eBay, while Dan Loeb announced plans for a proxy battle to win three board seats at Sotheby’s.
PepsiCo again rejected calls from activist Nelson Peltz to spin off its North American beverage business.
With most corporate earnings complete, next week’s calendar will be dominated by economic reports.
The schedule includes data on the US trade balance and construction spending and culminates with Friday’s monthly jobs report for February.