The Standard & Poor’s 500 Index reached its highest level since 2008 Tuesday.
Stocks can be jumpy on a day when the Federal Reserve makes a pronouncement, but there’s more driving today’s resilience.
The S&P 500 was up 0.87%, or 12 points, to 1,383.30. The Dow Jones Industrial Average moved past the 13,000 mark, rising nearly one percent, or about 109 points, to 13,068.47. The Nasdaq rose 1%, or nearly 30 points, to 3,013, a level not seen for more than a decade.
The VIX, which measures the volatility of the S&P 500, sank nearly 4% Tuesday, to near 15, a continuance of its steep slide since last fall.
What’s driving stocks higher? We called Ed Yardeni, president & chief investment strategist at Yardeni Research. In the case of those in the S&P 500, forward earnings — the time-weighted average of analyst expectations for profits in the current and coming years — rose to a new record high of $108.55 last week, he notes.
“The bull market that started, on an intra-day basis on March 6, 2009, remains in tact despite all sorts of challenges, including the ongoing financial crisis in Europe, concerns about slowing growth in China and renewed concerns about higher oil prices,”� Yardeni tells Barrons.com. “It is largely because the U.S. continues to surprise with its own resilience. The world’s largest economy continues to expand through thick and thin.”
“The arithmetic of the market is simple,” he adds. “As investors get more confidence that earnings can grow and be resilient in the face of these challenges, they are willing to pay higher multiples for these earnings.”
Among the day’s leaders: Alcoa (AA) up 2.5% to $10.12, Bank of America (BAC) up 1.8% to $8.13, Caterpillar (CAT) up 2.5% to $111.66, Disney (DIS) up 2% to $43.22, JPMorgan Chase (JPM) up 1.8% to $41.28, Pfizer (PFE) up 1.9% to $21.94 and United Technologies (UTX) up 2% to $85.67.
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