The S&P 500 on Monday climbed to a record close just shy of 2,000, as U.S. stocks received a lift from deal activity and hints of more stimulus from the European Central Bank.
Shares of Burger King Worldwide Inc., Tim Hortons Inc. and InterMune Inc. surged on merger news, while July new-home sales came in slightly below expectations, but the government upwardly revised the June result.
The S&P 500 SPX, +0.48% gained 9.52 points, or 0.5%, to end at 1,997.92 after notching an intraday record at 2,001.95. While the benchmark finished under the milestone level of 2,000, it still achieved an all-time closing high for the 29th time this year.
All 10 sectors advanced, with financials XLF, +0.87% and energy XLE, +0.89% performing best.
The Dow Jones Industrial Average DJIA, +0.44% climbed 75.65 points, or 0.4%, to end at 17,076.87, while the Nasdaq Composite COMP, +0.41% jumped by 18.80 points, or 0.4%, to finish at 4,557.35. The Dow stands 0.4% off its July 16 record close, and the tech-heavy Nasdaq again scored its highest close since March 31, 2000.
S&P 500 tops 2000: “It’s an encouraging thing,” said Sam Stovall, equity strategist at S&P Capital IQ, referring to the benchmark moving above 2,000 intraday. The index hasn’t cleared a “millennial number” since 1998, when it topped 1,000, he added. Read more: How the S&P 500’s top 10 changed in the index’s march to 2,000 from 1,000
Stovall said that he doesn’t think valuations are stretched, and sides more with Jeremy Siegel’s camp rather than Robert Shiller’s — two well-known market watchers with diverging views. Read more: Yale’s Shiller and Penn’s Siegel are at odds
In addition, Stovall sounded a cautious note about anemic summertime trading. “The volume is incredibly low,” he told MarketWatch. That’s “a sign of maybe lack of conviction, but I think at the same time it doesn’t necessarily mean things have to go bad.” Total composite volume was at its lowest level of the year for any full trading day.
Draghi ‘whatever it takes’ part 2: Inspiration for Monday’s gains came in part from stronger European markets, where the Stoxx Europe 600 SXXP, -0.01% closed higher following ECB President Mario Draghi’s suggestion that further stimulus could be on the way for Europe.
“[Draghi] was dovish and, to a certain degree, while Yellen and the rest of the Fed members are preparing for a rate hike next year, the tone is still that of easy money and so if you have a flow of easy money coming out of Europe, that is going to help equity markets here in the States as well,” said Peter Cardillo, chief market economist at Rockwell Global Capital. Read more: Draghi’s remarks seen as ‘major breakthrough’
Draghi’s comments, which came Friday after European markets had closed, and a speech by Federal Reserve Chairwoman Janet Yellen were initially brushed aside by Wall Street last week.
Another Merger Monday: Burger King Worldwide Inc. BKW, +19.51% shares closed 19.5% higher following news the hamburger chain is in talks to buy Canadian coffee-and-doughnut chain Tim Hortons Inc. THI, +18.91% The deal would be set up as a so-called tax inversion, moving Burger King’s tax base to Canada. U.S.-listed shares of Tim Hortons rose 18.9%.
Shares of InterMune Inc. ITMN, +35.41% soared 35.4% after Switzerland-based Roche Holding AG RHHBY, +0.69% RO, -0.38% ROG, -0.15% said Sunday it will pay $8.3 billion for the California biotech firm.
Shares of Ann Inc. ANN, +6.45% finished up 6.5% after activist investor Engine Capital LP called on the parent of clothing retailer Ann Taylor to sell itself.
Other markets: The euro EURUSD, -0.01% fell against the dollar on the suggestion of more ECB easing, as well as a survey that showed weaker German business confidence. Asian stocks finished mixed, with Japanese and Hong Kong equities up, but Shanghai stocks down. Gold and crude oil both slipped, and Monday was a holiday for U.K. markets.