NEW YORK: U.S. stocks rose Monday, sending the Dow Jones industrial average to its highest level since 2007, as speculation the Federal Reserve will continue stimulus measures overshadowed concern over spending cuts and China’s economy.
Airlines rallied while industrial and energy stocks fell as oil dropped to its lowest level since December.
Yahoo! Inc. jumped 3.5 percent after an analyst at Barclays Plc raised his rating on the company. Home builders advanced as D.R. Horton Inc. and Ryland Group Inc. rose at least 3.2 percent. Google Inc. jumped 1.9 percent to a record, while Apple Inc. retreated 2.4 percent to its lowest level in more than a year.
The Standard & Poor’s 500 index rose 0.5 percent to 1,525.20 after falling as much as 0.4 percent earlier. The Dow gained 38.16 points, or 0.3 percent, to 14,127.82, its highest level since October 2007.
“Excluding this quarter, which will be impacted by the sequester, the economy probably strengthens as the year goes on,” said Michael Mullaney, chief investment officer at Boston-based Fiduciary Trust Co., which manages $9.5 billion. “The Fed is going to be our friend for an extended period of time, and as the old adage goes, don’t fight the Fed.”
The bull market in U.S. equities is entering its fifth year this month after the S&P 500 surged 124 percent from a 12-year low in 2009 amid better-than-estimated corporate earnings and three rounds of bond purchases by the Fed to keep interest rates low and stimulate the economy. The S&P 500 has climbed 6.9 percent this year and is trading at 2.6 percent below its record of 1,565.15 reached in October 2007. The Dow is less than 0.3 percent from its high of 14,164.53.
Stocks rose as Federal Reserve Vice Chairman Janet Yellen said the U.S. central bank should press on with $85 billion in monthly bond buying while tracking possible costs and risks from the unprecedented program.
Equities fell early in the trading day as China’s services industries expanded last month at the slowest pace since September. The non-manufacturing Purchasing Managers’ Index fell to 54.5 in February from 56.2 in January, the Beijing-based National Bureau of Statistics and China Federation of Logistics and Purchasing said. A reading above 50 indicates expansion.
A Bloomberg gauge of U.S. airlines rallied 4.1 percent to 44.93, its highest level in more than two years. Industrial and energy companies in the S&P 500 declined. Crude prices briefly fell below $90 a barrel for the first time in 2013.
Delta Air Lines Inc. surged 5.6 percent to $15.65, its highest level since February 2008. The Atlanta-based carrier increased the lower end of its guidance for unit revenue to 4.5 percent from 4 percent.
United Continental Holdings Inc. climbed 5.3 percent to $28.82 and Alaska Air Group Inc. added 4.1 percent to a record $54.53.
Consumer discretionary companies in the S&P 500 rose 1 percent to a record. Best Buy Co. surged 3.6 percent to $17.77 and Target Corp. jumped 3.6 percent to $66.44, its highest in more than five years.