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S&P first: close over 1,900

Trader Peter Tuchman works on the floor of the New York Stock Exchange on Friday in quiet trading ahead of the Memorial Day weekend.

Associated Press

Trader Peter Tuchman works on the floor of the New York Stock Exchange on Friday in quiet trading ahead of the Memorial Day weekend.

Call it the Great Slog.

Stocks are bumbling along this year after a gangbusters 2013.

The upward grind is underscored by the Standard & Poor's 500 index, which closed above 1,900 for the first time Friday. The index has eked out a gain of 2.8 percent this year, compared with a 16 percent increase over the same period last year.

Other major indexes haven't fared any better. The Dow Jones Industrial Average and the Nasdaq composite are barely positive for 2014.

The market's five-year bull run has slowed as investors become more evenly split between those who remain optimistic about the outlook for stocks and the economy, and those who think it's time for a selloff. Investors haven't seen a "correction" — Wall Street-speak for a drop of 10 percent of more — for an unusually long time.

"People have been waiting for this huge correction, but as soon as we have even a little bit of a pullback, people see the value in it and they're jumping in," said Karyn Cavanaugh, senior market strategist at Voya Investment Management.

Cavanaugh believes there will be a "spring snapback" in the economy. Company earnings, at record levels, will keep climbing and support stock prices.

The S&P 500 on Friday rose 8.04 points, or 0.4 percent, to close at 1,900.53. The index first rose above 1,900 during trading May 13 but fell back that day to close below 1,900.

Also Friday, the Dow climbed 63.19 points, or 0.4 percent, to end at 1,606.27. The Nasdaq rose 31.47 points, or 0.8 percent, to 4,185.81.

Investors on Friday favored stocks that stand to fare better than others in a strengthening economy. Gains were led by technology, materials and consumer discretionary stocks.

The S&P 500 has gained 180 percent since bottoming out in March 2009 during the Great Recession. Stocks are now in the second-longest bull market since 1946, data from S&P Capital IQ says. The index has also gone 21/2 years without a correction. Typically, those declines occur once every 18 months.

Another sign investors have been more nervous this year than last is that while the S&P 500 has risen, the riskier parts of the stock market — such as small-company, social media and biotechnology stocks — have had sharp selloffs.

The Russell 2000, an index that tracks small-company stocks, is down 3.2 percent this year at 1,126.19.

Many investors remain optimistic, though, pointing to record company earnings and the Federal Reserve.

In the first quarter of 2014, companies in the S&P 500 earned an average of $27.59 a share, the second-highest level recorded, falling just below the $28.46 per share earned in the fourth quarter of 2013. Thus far during the economic recovery, companies have boosted earnings by cutting costs. As the economy continues to strengthen, the hope among investors is that overall demand will improve and corporations will start reporting higher revenues.

The stock market's rise has also been supported by the Federal Reserve's bond-buying policy. Though policymakers are winding down the stimulus, many economists don't believe the Fed will start raising interest rates before the second half of next year.

S&P first: close over 1,900 05/23/14 [Last modified: Friday, May 23, 2014 8:16pm]
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