What bubble? Nasdaq closes at record as stocks rally on dovish Fed

18.06.2015 23:12

What bubble? Nasdaq closes at record as stocks rally on dovish Fed

Evelyn Cheng | Fred Imbert

U.S. stocks closed about 1 percent higher on Thursday, with the Nasdaq topping its intraday high from March 2000. The Fed’s dovish statement from Wednesday afternoon boosted investor sentiment amid the Greece debt talks. (Tweet This)

There’s “confidence the Fed is not going to be moving aggressively,” said Robert Pavlik, chief market strategist at Boston Private Wealth. He said without the Greek overhang, “I think the markets do even better.”

The Nasdaq Composite gained more than 1 percent to end above its closing high set in late May and its all-time record high of 5,132.52 set in intraday trade on March 10, 2000, during the tech bubble.

The iShares Nasdaq Biotechnology ETF (IBB) closed up 3 percent andApple ended 0.44 percent higher. The Russell 2000 also extended gains after setting a new all-time intraday high.

However, the Nasdaq 100 did not reach records and remains about 6 percent off its record, set in March 2000.

Read MoreTech-bubble high may signal correction

“I think (the Nasdaq high) is interesting but nothing that folks are going crazy over,” said JJ Kinahan, chief strategist at TD Ameritrade. “They have benefited greatly from the Information Technology area and the Consumer Discretionary areas of the Nasdaq 100 as both have performed well over the last year.The market has benefited also from a few days of risk avoidance going in to the Fed.”

Stocks briefly trimmed gains in early afternoon trade on discouraging news out of the negotiations in Europe. Greece and its creditors failed to reach a cash-for-reforms deal on Thursday during a euro group meeting of regional finance ministers. As a result, European Council President Donald Tusk said euro zone leaders will meet to discuss the impasse on Monday.

European Union diplomats also dismissed a German newspaper report that indicated Greece’s aid would be extended.

The country is set to default on a 1.5 billion euro ($1.7 billion) debt repayment to the International Monetary Fund on June 30 unless it receives fresh funding from its creditors—the European Union, the International Monetary Fund and the European Central Bank. IMF Managing Director Christine Lagarde said on Thursday in a Reuters report that there is no possibility of delaying that deadline.

Read MoreIf Greece is in crisis, why’s the euro so strong?

European stocks turned higher in the close on earlier hopes of a deal, with the DAX up more than 1 percent after initial losses. Greece’s ATHEX Composite ended mildly higher.

U.S. stocks closed modestly higher on Wednesday after the U.S. Federal Reserve left interest rates at zero and said the country’s economy was likely to be strong enough to withstand a rate hike this year.

“People were concerned if the Fed would be more hawkish. That shift did not occur and that gave relief,” said Adam Sarhan, CEO of Sarhan Capital.

Investors also eyed the weaker dollar, which held lower after hitting a 1-month low on the Fed statement. The euro held near $1.14, while the yen was stronger against the dollar around 123 yen.

“The main catalyst was what the Fed said yesterday. That sent the dollar lower (despite) Greece on the brink of defaulting,” said Peter Cardillo, chief market economist at Rockwell Global Capital.

Analysts also noted positioning ahead of quarterly options expiration on Friday.

The Dow Jones industrial average traded about 215 points higher, off earlier gains of 238 points.

The Dow transports rose more than 1.5 percent, led by Alaska Air. Southwest Airlines was the only laggard, trading more than 1 percent lower on a downgrade from Barclays.

Fitness wearables maker Fitbit closed 48.95 percent higher in its market debut, the eighth best so far this year. The stock was the fourth most active stock on the New York Stock Exchange in Thursday’s trade.

“In the absence of Greece overhanging this market was pretty much about what it heard (from the Fed) yesterday,” said Art Hogan, chief market strategist at Wunderlich Securities.

Bond yields edged higher as traders digested economic data that continued to indicate growth, with the U.S. 10-year Treasury yield near 2.37 after earlier falling below 2.3 percent. The 2-year yield traded near 0.64 percent

The May consumer price index (CPI) showed an increase of 0.4 percent, their largest increase in more than two years as gasoline prices surged.

“On balance, I didn’t think the number was that bad. Probably a little softer than the Fed would like to see,” said Marie Schofield, chief economist and senior portfolio manager at Columbia Threadneedle Investments.

Weekly jobless claims came in at 267,000 for a larger-than-expected decline.

“It does give investors confidence when you see numbers like this,” said Derek Gabrielsen, wealth advisor at Strategic Wealth Partners. “All in all, the jobless claims show strength in the jobs sector.”

The Philadelphia Fed index for June posted 15.2, above May’s read of 6.7. Leading indicators for May showed an increase of 0.7 percent.

DJIA Dow Jones Industrial Average 18115.84
180.10 1.00%
S&P 500 S&P 500 Index 2121.24
20.80 0.99%
NASDAQ Nasdaq Composite Index 5132.95
68.07 1.34%

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 13.

About two stocks advanced for every decliner on the New York Stock Exchange, with an exchange volume of 559 million and a composite volume of 2.8 billion in afternoon trade.

Crude oil futures settled up 53 cents to $60.45 a barrel on the New York Mercantile Exchange. Gold futures jumped $25.20 to settle at $1,202.00.

Read MoreEarly movers: RAD, LUV, CL, FIT, H, JBL, GM & more

In corporate news, Oracle reported adjusted quarterly profit of 78 cents per share, 8 cents below Street forecasts. Revenue also missed estimates, with the software maker hurt by a stronger dollar. It did, however, see sales growth in its cloud-based offerings.

Apple is generating sizable profits from sales of Apple Watch bands, according to data seen by Reuters. Many buyers of the watch are buying more than one band, according to data provided by research firm Slice Intelligence.

Southwest Airlines—Barclays downgraded the airline’s stock to “underweight” from “overweight,” saying the stock is now trading at too large a premium to its peers.

—CNBC’s Peter Schacknow contributed to this report


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