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The Dow closed at its highest level in more than four years on Tuesday (May 01) after U.S. manufacturing expanded at a faster pace than expected in April, easing jitters about a slowdown in the economic recovery.
The Dow now sits at levels not seen since December 2007. The gains leave the benchmark S&P 500 within about 16 points of a high reached in May 2008. A convincing break above that level could set the market up for more gains, traders said.
But the Nasdaq sold off sharply into the close on weakness in Apple and BlackBerry maker Research in Motion in a sign the market could struggle to make further headway in the short-term. The Institute for Supply Management said U.S. manufacturing growth came in at its strongest rate in 10 months in April.
That reading suggested the economy remains resilient after indications it had lost momentum at the start of the second quarter. Early gains this year have been held in check in recent weeks on worries about U.S. economic growth. Shares of Intel Corp long touted by many investors as undervalued, hit a 52-week high at $29.05 (USD). Intel closed at $28.95 - up 2 percent - in a sign that money is still flowing into large-cap technology stocks as the market grinds higher.
Financial, transportation and energy shares, all of which are linked to economic growth, were strong performers. The S&P financial sector index rose 1.1 percent, helped by a 2.5 percent gain in Bank of America, which closed at $8.31.
Tuesday's move higher, which came in a relatively quiet market with European exchanges closed for May Day holidays, drove the S&P 500 within striking distance of its recent high at 1,422.38. The Dow Jones industrial average gained 65.69 points, or 0.50 percent, to 13,279.32 at the close. The Standard & Poor's 500 Index rose 7.91 points, or 0.57 percent, to 1,405.82. The Nasdaq Composite Index added 4.08 points, or 0.13 percent, to 3,050.44. The Dow earlier rose as high as 13,338.66 points, its highest since December 2007.
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