US stocks rise and Apple hits its peak
US stocks rose yesterday, with the S&P 500 near seven-month highs, after Greece’s parliament approved reforms needed to qualify for a bailout and avoid an unruly default.
Apple shares closed above $500 for the first time after a gain of 1.9 per cent, leading the Nasdaq Composite to close at a more than 11-year high.
Greek lawmakers backed drastic cuts in wages, pensions and jobs on Sunday as the price of a €130bn (£109bn) bailout by the European Union and International Monetary Fund.
But unrest in the streets and a voting rebellion by lawmakers of the ruling coalition suggested Greece may be on the brink of massive social unrest, which would make it difficult for Athens to stick to the rescue terms.
Doug Roberts, chief investment strategist for the website ChannelCapitalResearch.com, said there is some scepticism about whether the Greek public will accept the reforms. But current market conditions make it hard for money managers to avoid stocks.
“Mutual fund managers have a herd instinct and if everyone else is playing the game, with cash yielding zero, they have to participate,” Roberts said.
The S&P 500 last week hit a seven-month high and is up more than 25 percent from a low in early October, in part on bets the Greek reforms would pass. The benchmark index is hitting strong resistance in the 1,355-1,360 area, a possible trigger for a pullback.
“You have to respect the fact the market has been as strong as it has been, but we wouldn’t buy into this strength,” said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland.
The Dow Jones industrial average gained 72.81 points, or 0.57 per cent, to 12,874.04. The S&P 500 Index gained 9.12 points, or 0.68 per cent, to 1,351.76. The Nasdaq Composite rose 27.51 points, or 0.95 per cent, to 2,931.39.
Apple raised the stakes in an intensifying global patent battle with Samsung Electronics by targeting Samsung’s latest model that uses Google’s Android software.
Apple shares rose as high as $503.83 and ended up 1.9 per cent to a record close of $502.60. Google rose one per cent to $612.20. Google is expected to win approval from regulators for a $12.5bn purchase of Motorola Mobility.