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Optimism for the second-quarter earnings season, boosted by Alcoa’s healthy set of figures last night, has helped propel share prices higher on Wall Street today, taking the Dow and S&P close to their record highs and the Russell 2000 to its highest level ever.
The Dow Jones was up 0.58% or 88 points at 15,314 late in the New York trading session, fewer than 100 points away from its record closing price of 15,409.39. The S&P 500 gained 0.78% or 12.8 points to 1653.3, with all key sectors within the benchmark index rising, and the Russell 2000 hit 1018.93 to set a new all-time high for the index.
One of the biggest gainers in the S&P 500 today was FedEx, which rose 5% after widely-reported speculation that the company might be the target of two investment funds being launched by Pershing Square Capital. The funds will invest $1 billion into an undisclosed public company with high barriers to entry and that is trading at a discount to its main competitor. There is no evidence that FedEx is the company in question, however, and rival UPS also rose 1.8% today.
This fourth trading day in a row of advances in the main US indices suggests that worries over the possibility of the Fed cutting back on its monthly asset purchases have dissipated, but this will be put to the test tomorrow when the Fed releases the minutes from the last Federal open Market Committee (FOMC) meeting.
We have heard so much from Fed official recently, including a fairly transparent explanation by Ben Bernanke following the last meeting, that the impact of these minutes should, in theory, be limited, but I would bear in mind that the last set of minutes rattled the markets upon release.