Dow, S&P 500 close at record highs as tech stocks rally

Stocks closed higher on Wall Street Monday, May 12, 2014, sending the Dow and S&P 500 to fresh record highs. AP/MARK LENNIHAN

NEW YORK—The Dow and S&P 500 Monday closed at fresh record highs, spurred by a strong rally in technology stocks that lifted the Nasdaq Composite Index by nearly 1.8 percent.

The Dow Jones Industrial Average jumped 112.13 points (0.68 percent) to 16,695.47, while the S&P 500 gained 18.17 (0.97 percent) to 1,896.65.

The Nasdaq added 71.99 (1.77 percent) at 4,143.86.

Analysts said there was no obvious catalyst for the rally, but pointed to a sense in the market that technology stocks had been oversold as investors worried the sector was overvalued. The Nasdaq dropped 6.6 percent between March 5 and last Friday.

Some money managers “have figured some of these tech stocks have been hammered a little too hard,” said Michael James, managing director of equity trading at Wedbush Securities.

Big gains were posted by prominent technology stocks like Facebook (+4.5 percent), Netflix (+5.1 percent) and Twitter (+5.9 percent). Some stocks in biotechnology, another hard-hit sector, also rose, including Biogen (+4.9 percent) and Celgene (+2.6 percent).

Still, James detected caution in the market in light of fairly modest trading volumes.

“There’s just as many people watching as there are participating today,” James said. “I don’t feel like there’s some huge groundswell of confidence behind this move.”

Botox-maker Allergan turned down an unsolicited takeover offer worth about $45.6 billion from pharmaceutical company Valeant, saying the bid “substantially undervalues” the company.

In response, Valeant, which is working with activist investor William Ackman, asked Allergan for a list of shareholders as part of a plan to take the offer directly to shareholders, according to a Valeant securities filing. Allergan fell 1.0 percent, while Valeant lost 0.8 percent.

Pinnacle Foods agreed to be bought by Hillshire Brands in a deal worth $6.6 billion. The transaction will boost Hillshire’s presence in frozen-food categories. Pinnacle jumped 13.2 percent, while Hillshire fell 3.2 percent.

Dow component IBM picked up 1.3 percent ahead of an annual investor day Wednesday. Chief executive Virginia Rometty told The New York Times that IBM is making progress building new business lines despite facing a “rocky time.” Revenues have declined for eight quarters in a row at the tech giant.

Bond prices fell. The yield on the 10-year US Treasury rose to 2.66 percent from 2.63 percent Friday, while the 30-year increased to 3.49 percent from 3.46 percent. Bond prices and yields move inversely.