US equities finally reached new five-year highs as investor optimism grew from the recent merger and acquisition activity and increased investor confidence in Germany.
The S&P 500 index rose .7% to 1530.94 in New York at the close of February 19. The Dow Jones Industrial Average (DJIA) closed at 14,035.67.
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Both closes were new highs for the indexes since October 2007. Volume on the DJIA was heavy at 6.5% above its three-month average.
CEOs are looking farther out on the horizon, an indication of greater confidence and better strategic decision making.
Almost $40 billion worth of deals were announced on February 14, making the month’s total over $140 billion.
The S&P is up 7.3% for the year so far on better-than-expected earnings reports and the deal struck by Congress on the federal budget.
Germany’s confidence index rose more than forecast, showing Europe’s largest economy is on the mend.
Nine out of 10 groups on the S&P advanced. Shares in the consumer staples and energy sectors climbed at least 1%.
Price swings narrowed more than at any time since the Great Depression, signifying renewed investor confidence.
The combination of lower volatility and the strongest start to a year since 1997 has the bears warning of investor complacency as the markets continue to rise.
Bulls are citing the switch from net outflows to net inflows
as a sign there is still room for investors to participate.