Two months after the first correction since 2011 broke a yearlong calm in U.S. equities, the Standard & Poor’s 500 Index is jumping again, climbing as much as 1.8 percent Thursday to bring its gain from its lowest close in August to 10 percent. The benchmark gauge for American equities now sits at a level last seen on Aug. 19 and is fewer than 7 points below its Dec. 31, 2014 closing price, making its performance year-to-date just about flat.
Slicing it differently: U.S shares have climbed back into the trading range they tumbled out of in August during a six-day selloff that wiped out $2 trillion in market value. Half of the S&P 500’s 10 major groups now are trading above their Aug. 19 closing levels, with energy stocks and consumer staples leading. While few investors are ready to sound the all clear, some see signs the worst is behind them, citing the market’s ability to go up even as corporate earnings fall flat.
The S&P 500 surged 1.7 percent to 2,052.58 at 4 p.m. in New York, sparked by a batch of better-than-estimated earnings from companies including McDonald’s Corp. and EBay Inc., bolstering optimism on the health of corporate America. Prospects that Europe will move to boost its economy provided a further lift as European Central Bank President Mario Draghi said policy makers will investigate fresh stimulus measures.
The rally is also an affirmation of sorts for Wall Street stock forecasters who clung to optimistic outlooks even as the S&P 500 slid more than 11 percent to 1,867.61 between Aug. 17 and Aug. 25. Getting to the median estimate of 21 strategists tracked by Bloomberg of 2,150 would’ve taken a 15 percent rally from August’s lows. Today it requires less than 5 percent.