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October 18, 2013

S&P 500 reaches all-time high after debt deal

By Ken Sweet / The Associated Press

NEW YORK — The stock market hit an all-time high Thursday as investors put the government shutdown and debt ceiling crisis behind them.

The Standard & Poor’s 500 index rose 11.61 points, or 0.7 percent, to close at 1,733.15 – a record close.

The market rose throughout the day as investors got back to focusing on corporate earnings and economic data.

American Express and Verizon rose the most in the Dow Jones industrial average after reporting earnings that beat expectations from financial analysts.

The Dow ended the day down two points, or 0.01 percent, to 15,371.65. The index of 30 big U.S. companies was held back by declines in IBM, Goldman Sachs and UnitedHealth.

IBM’s third-quarter revenue fell and missed Wall Street’s forecast by more than $1 billion. The stock closed down $11.90, or 6 percent, to $174.80. Earlier, it had touched its lowest level of the past year – $172.57

Goldman Sachs also weighed down the index. The investment bank’s revenue fell sharply as trading in bonds and other securities slowed. Goldman fell $3.93, or 2.4 percent, to $158.32.

The focus on earnings is a change of pace for Wall Street, which had been absorbed in Washington’s political drama over the last month.

Now that the United States has avoided the possibility of default, at least for a few months, earnings news is expected to dominate trading for the next couple of weeks. So far, only 79 companies in the S&P 500 have reported third-quarter results, according to S&P Capital IQ. Analysts expect earnings at those companies to increase 3.3 percent over the same period a year ago.

“I don’t think we can completely close the door on the debt ceiling chapter just yet, but we can get back to the stuff that really matters,” said Jonathan Corpina, who manages trading on the floor of the New York Stock Exchange for Meridian Equity Partners.

Other indexes also posted big gains. The Nasdaq composite closed up 23.71 points, or 0.6 percent, to 3,863.15.

The Russell 2000 index, which is made up of primarily smaller, riskier companies, also hit an all-time high. It closed up 9.85 points, or 0.9 percent, to 1,102.27 and has risen nearly 30 percent this year.

Market analysts think the 16-day partial shutdown of the government caused billions of dollars of damage to the economy. Government employees were furloughed, contracts were delayed, and tourism declined at national parks.

Analysts at Wells Fargo said the shutdown likely lowered economic growth by 0.5 percentage point.

There remain broader concerns that Democrats and Republicans won’t be able to draw up a longer-term budget. The deal approved late Wednesday only permits the Treasury Department to borrow through Feb. 7 and fund the government through Jan. 15.

“The agreement represents another temporary fix that pushes fiscal uncertainty into the early months of next year,” Wells Fargo analysts said.

Among other stock moves:

Verizon rose $1.65, or 4 percent, to $48.90. The telecommunications company earned an adjusted 77 cents per share for the recent quarter, beating expectations of financial analysts.

UnitedHealth Group dropped $3.82, or 5 percent, to $71.37. The health insurance giant narrowed its 2013 profit forecast, instead of raising it, giving some analysts pause.





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