S&P surpasses pre-recession high

Index closes at 1,569.19; low point was 676.53 in March 2009

Specialist Ronnie Howard, center, works at his post on the floor of the New York Stock Exchange Thursday, March 28, 2013. The Standard & Poor's 500 index closed at a record high Thursday, beating the mark it set in October 2007. The S&P rose six points to 1,569, a gain of 0.4 percent, beating its previous record by four points. The index is still shy of its all-time trading high of 1,576. (AP Photo/Richard Drew)
Specialist Ronnie Howard, center, works at his post on the floor of the New York Stock Exchange Thursday, March 28, 2013. The Standard & Poor's 500 index closed at a record high Thursday, beating the mark it set in October 2007. The S&P rose six points to 1,569, a gain of 0.4 percent, beating its previous record by four points. The index is still shy of its all-time trading high of 1,576. (AP Photo/Richard Drew)

NEW YORK - The Standard & Poor’s 500 index closed at a new high Thursday, three weeks after another popular market gauge, the Dow Jones industrial average, surpassed its own closing record.

It marked the second time in less than a month that the American stock market marched past another milepost on its journey back from the recession.

The reaction on Wall Street was muted - more of a dull buzz than a victory cry.Investors warned clients not to get too excited.

“Getting back to where we were is an important step,” said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. But he cautioned in a note to investors: “Markets are volatile, and if you are a long-term investor you should expect declines.”

The S&P rose 6.34 points to 1,569.19, a gain of 0.4 percent, beating by 4.04 points its previous closing record of 1,565.15 set on Oct. 9, 2007. The index is still shy of its all-time intraday trading high of 1,576.09.

The Dow rose 52.38 points to 14,578.54 and the Nasdaq rose 10.99 points to 3,267.52. Nearly two stocks rose for every one that fell on the New York Stock Exchange. Consolidated volume was relatively light at 3.2 billion shares.

The S&P has now recovered all of its losses from the recession and the financial crisis that followed. Investors who put their dividends back into the market have done even better. A $10,000 investment in the S&P back in October 2007 would be worth $11,270.

On any other day, a gainof that size would go unheralded, but not after the turmoil that began in late 2008 and persisted through a slow, sometimes stalled recovery.

The S&P 500 is a barometer that gauges market performance. And while professional investors might scoff at using it to decide when to buy and sell, the breaking of an old record can be psychologically important.

The U.S. economy is stable, but growth is anemic. The European debt crisis is far from resolved. Some investors are concerned thatthe market’s gains this year are being fueled by the Federal Reserve’s easy money policy, and they will disappear once the Fed reverses course.

U.S. economic news was mixed Thursday.

The U.S. economy grew faster than first estimated in the fourth quarter, the government reported. But the growth, an annual rate of 0.4 percent, was still weak. The number of Americans seeking unemployment aid jumped for the second straight week. Longerterm, though, jobless claims have been declining since November. Unemployment is 7.7 percent, versus the 4.7 percent in 2007.

“If you’re a bull or a bear, you could find enough news out there to convince you of your position,” said Jim Lauder, chief executive officer of Global Index Advisors in Marietta, Ga., and co-portfolio manager on Wells Fargo Advantage Dow Jones Target Date Funds.

Cyprus reopened its banks after closing them for nearly two weeks to keep depositors from making panicked withdrawals. Portugal reported that its budget deficit was widening.

Brian Singer, partner at William Blair in Chicago, said the market’s gains Thursday were more about a lack of any major negative developments than the appearance of any good ones. Investors aren’t necessarily convinced of the economy’s health, but they’ve learned to live with the sicknesses.

“We are looking at a realization that Western civilization is not ending as we know it,” Singer said. “Fiscal discussions in the U.S. have settled into an acceptable stalemate. The Italian elections that did not result in a government are on hold. Cyprus hasn’t sunk into the Mediterranean.”

Thursday also marked the end of the first quarter, since markets are closed today forGood Friday. Overall, it’s been a strong quarter.

The Dow climbed for the first 10 trading days of March - a record not matched in more than 16 years.

In the past 10 days, though, it has wavered under the weight of Cyprus. On March 5, it beat its own all-time record of 14,164.53, which was also set on Oct. 9, 2007, and has been climbing ever since.

The S&P 500’s last record was followed by a painful downfall. By March 2009, longafter the subprime mortgage market had been revealed as an unsustainable bubble and rumors were buzzing that the government might nationalize U.S. banks, the S&P had cratered from its lofty heights. It fell to its recession low, 676.53, on March 9, 2009 - down 57 percent from its October 2007 pinnacle.

Now, with Thursday’s gains, it has more than doubled since reaching that bottom. Including dividends, it is up more than 150 percent.

Business, Pages 25 on 03/29/2013

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