Sun, Mar 31, 2013 - Page 15 News List

Pullback possible after S&P reaches historic milestone

Reuters, NEW YORK

After flirting with an all-time high for three weeks, the S&P 500 posted its best closing level in history, but some strategists say Thursday’s record could be a harbinger that the stock market rally is running out of steam.

The S&P traded within 10 points of the all-time closing high for 13 sessions before breaking through, showing that investors need new catalysts to push firmly above resistance levels.

“As the market has gone higher ... upward moves have generally gotten smaller, which suggests that the move is getting old and that we need a pullback,” Standard & Poor’s chief technical strategist Mark Arbeter said in New York.

The benchmark index has risen almost 10 percent so far this year, fueled by strong profit growth and accommodating monetary policy from the US Federal Reserve. Yet those gains have slowed as investors fret over Cyprus’ bailout and the US economy.

Still, stocks have been resilient, lifting the S&P to its record close of 1,569.19 on Thursday. Investors stepped in on declines to buy and finally pushed the S&P above the previous record set on Oct. 9, 2007.

The broad index is also within a stone’s throw of its intraday record of 1,576.09. The Dow surpassed its record close on March 5 and set a series of records ending on Thursday at 14,578.54.

The S&P has risen for 11 of the past 13 weeks, up 0.4 percent over the past two weeks. By contrast, the CBOE Volatility index, a measure of investor anxiety, is up about 14.5 percent over the same period.

US markets were closed for the Good Friday holiday and reopen tomorrow.

The stock market next week will face tests of the milestone it reached, with the situation of Cyprus’ banks and a round of US data, including this month’s jobs report on Friday, facing investors.

About 197,000 jobs were added this month, economists in a Reuters poll predicted. That would be down from the 236,000 jobs created in the previous mont, but still suggest improvement in the labor market. Unemployment is seen holding steady at 7.7 percent.

A strong payroll report could spark caution if it raises questions about whether the Fed would be more inclined to reduce monetary stimulus more quickly.

However, the Fed has not suggested a change in its stimulus measure is likely.

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