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S&P 500 breaks through 2007 closing high

11:40 AM, Mar 28, 2013   |    comments
Nope. They aren't applauding the new S&P 500 intraday high on March 28, 2013. But they are applauding in this file photo from March 25. (Photo: John Moore Getty, Images)
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The Standard & Poor's 500-stock index, a broad measure of the U.S. stock market, on Thursday became the latest brand-name U.S. stock index to hit a record high since the bull market began in March 2009.

The benchmark stock gauge, widely owned by investors via index mutual funds, finally broke through its previous closing high of 1,565.15, set Oct, 9, 2007. The new high, if it sticks, will erase all of the nearly 57% the index lost during the 2007-2009 bear market.

The S&P 500 stock index started the day 2.30 points away from its all-time high. It got within 0.06 points in early trading before backing down -- a maddening pattern that started two days ago.

Its final breakthrough is significant as it confirms the record-breaking price action of other closely watched indexes.

It joins a host of other U.S. stock indexes at new highs, such as the blue-chip Dow Jones industrial average, the small-company-dominated Russell 2000, and the Wilshire 5000, a broad index of roughly 3,700 names, including big, mid-size and small stocks.

For the year, the Dow is up almost 11% and the S&P and Nasdaq indexes are up almost 10%.

"The bull market is four years old, yet it remains strong," says Ed Yardeni, chief investment strategist at Yardeni Research, as economic reports continue to show recoveries in jobs, housing and manufacturing. And near-term, concerns about the federal budget have been kicked down the road.

Others on Wall Street, however, warn of a near-term pullback.

"We are at a point short-term where you can flip a coin" as to whether stocks will keep going higher or give back some of their gains, says Leo Kelly, managing director an partner at HighTower's Kelly Wealth Management.

While Kelly says his firm has taken profits on stock-related investments that have enjoyed a nice run, he says stocks still make the most sense long term. "Stocks ... are one of the investment vehicles that are going to make a decent rate of return. You won't be able to make a return on bonds" with prices already near record highs and yields at record lows.

The breakout came despite the banking crisis in Cyprus. As part of Cyprus' deal with the European Central Bank, International Monetary Fund and European Commission depositors with more than 100,000 euros (about $130,000) in the country's two largest banks are being forced to take losses.

Authorities have been putting measures in place to prevent a rush of euros out of the country's banks. Cash withdrawals will be limited to 300 euros ($383) per person each day, and no checks will be cashed.

Evan Lucas of IG Markets in Melbourne said the deal has sparked fears it may be repeated in other European nations that faced similar circumstances. In an e-mail commentary, he said investors saw the deal "as a monster in the shadows for banks in Portugal, Spain and Italy" since it requires depositors - not the public or its tax contributions - to take the pain.

In Asia on Thursday, Japan's Nikkei 225 index tumbled 1.26% to 12,335.96 and Hong Kong's Hang Seng index lost 0.91% to 22,260.62.

Wall Street stocks closed mostly lower Wednesday on Europe worries. The Dow dropped 0.2% to close at 14,526.16. The S&P 500 fell less than 0.1% to 1,562.85. The Nasdaq composite index rose 0.1% to 3,256.52.

Ongoing political stalemate in Italy is another cause concern for markets on Thursday. Italy is the third-largest economy of the 17 countries that use the euro and despite a recent election no political party has yet been able to form a new government. The FTSE MIB index rose 0.54% to 15,435 on Thursday.

Benchmark oil for May delivery was up 29 cents to $96.87 per barrel in electronic trading on the New York Mercantile Exchange. The contract gained 24 cents to close at a five-week high of $96.68 per barrel on the Nymex on Wednesday.

Contributing: Associated Press

Adam Shell and Ray Goldbacher, USA TODAY

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