US stocks closed higher Wednesday as technology stocks rallied amid upbeat earnings result and lawmakers voted to temporarily suspend the federal debt limit, helping the S&P 500 post its sixth straight day of gains that saw the benchmark index hitting a new five-year high.
Equities received support earlier after the Republican-controlled House of Representatives voted to suspend the $16.4 trillion debt limit until May 19. The vote averts a possible US default by at least four months and sets up the stage for another round of allegedly intense negotiations over cuts in federal programs.
A January 17 survey of Bloomberg showed global investors perceived the state of US finances the greatest threat to the world economy with nearly half holding back their investment decisions in response to budget battles. 36 percent respondents said US fiscal woes was the greatest risk compared with 29 percent who chose Europe’s sovereign debt crisis.
The International Monetary Fund projected a second year of contraction for the euro region while cutting global growth forecasts for 2013. The Washington-based IMF said the world economy will expand 3.5 percent this year, less than the 3.6 percent projected in October.
The Dow Jones Industrial Average (DJIA) finished 67 points higher at its highest closing since Oct 31, 2007. International Business Machines, which accounts for 12 percent of the blue-chip index, added 66 points to the 30-component index’s gains a day after the technology services company projected better-than-estimated 2013 results, allaying fears of a slowdown in the tech sector.
The S&P 500 Index (SPX) rose 2 points with technology gaining the most and materials faring the worst among its 10 industry groups. Both, the Dow and the S&P 500, ended at fresh five-year highs, with the S&P 500 inching closer to the psychologically important 1,500 level.
Google surged 5.5 percent after reporting earnings that topped estimates. Advanced Micro Devices Inc vaulted more than 11 percent after fourth quarter revenue beat forecasts, helped by sales of processors that run servers.
Shares of Apple Inc sank more than 10 percent in after hours trading after the company trailed revenue estimates but topped profit expectations. It remains to be seen if that drop has an effect on the major indexes tomorrow.
Treasuries pared gains after the House of Representatives voted to suspend the nation’s debt ceiling temporarily, deferring issues on government funding and automatic spending cuts for now.
With the major indexes remaining in a relatively tight range throughout the day, our Trend Tracking Indexes (TTIs) changed only slightly with the Domestic TTI inching up to +3.32% while the International TTI slipped to +10.38%.
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