Benchmarks bolstered gains primarily due to encouraging minutes of the Federal Open Markets Committee (FOMC) meeting and bullish investor outlook towards technology companies. Meanwhile, the Dow Jones and the S&P 500 recorded all-time highs. The President of the United States, Barack Obama proposed a "fiscally responsible" budget and wanted Republicans and Democrats to take a common stand over this. All the top ten S&P 500 industry groups finished in the green, with the technology sector emerging as the biggest gainer.
The Dow Jones Industrial Average (DJI) rose 0.9% to close the day at 14,802.24. The S&P 500 gained 1.2% to finish yesterday's trading session at 1,587.73. The tech-laden Nasdaq Composite Index increased 1.8% to end at 3,297.25. The fear-gauge CBOE Volatility Index (VIX) lost almost 3.7% to settle at 12.36. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 6.24 billion shares, below 2012's average of 6.48 billion shares. Advancing stocks outnumbered the decliners. For the 72% that advanced, 25% declined.
Yesterday's trading session finally witnessed the S&P 500 breaching its all-time high of 1,576.09. The S&P 500 touched an intra-day high at 1,589.07. Meanwhile, the Dow and the Nasdaq also created a new intra-day record, touching 14,826.66 and 3299.15, respectively.
Investor sentiment received a boost when the FOMC released its minutes well before expected. According to the minutes, a majority of the Fed members support the continuation of the bond buying program at least till mid-2013. This program was introduced with the sole purpose of keeping long-term interest rates low and reviving the economy. The program was expected to continue till the economy reaches a point where the unemployment rate is 6.5% and the inflation rate is 2.5%. This program has also been a key factor in catapulting the Dow and the S&P 500 to new record levels.
Until now, this program has been successful in keeping interest rates low while the unemployment rate is gradually decreasing. But in light of recent employment figures, an unemployment rate of 6.5% is expected to be achieved not earlier than 2015. A few Fed members had concerns over the continuation of this program. They think that further extensions to the bond-buying program could increase inflation and interest rates and cause instability in the financial markets.
Meanwhile, President Barack Obama, has expressed his views on the 2014 budget. He termed the budget as a "fiscally responsible blueprint for middle class jobs and our economy." The focus of this $3.77 trillion budget is on investment in education, infrastructure and affordable college education. President Obama said that legislation had also been signed in order to reduce the national debt by $2.5 trillion. More than two-thirds of the national debt would be reduced by levying more tax on the wealthy, that is, those with annual income in excess of $1 million and by implementing spending cuts.
Commenting on national debt, President Obama said, "My budget will reduce our deficits by nearly another $2 trillion so that all-told, we will have surpassed the goal of $4 trillion in deficit reduction that independent economists believe we need to stabilize our finances, but it does so in a balanced and responsible way -- a way that most Americans prefer."
Of the top ten S&P 500 industry groups, technology stocks gained the most. The Technology SPDR (XLK) gained 1.8%. Stocks such as Apple Inc. (NASDAQ: AAPL ), Microsoft Corporation (NASDAQ: MSFT ), International Business Machines Corp. (NYSE: IBM ), Google Inc. (NASDAQ: GOOG ) and AT&T Inc. (NYSE: T ) gained 2.0%, 2.3%, 1.3%, 1.6% and 1.1%, respectively.