S&P 500 closes above 1,700 points for first time

The American flag and a sign for Wall St. are shown outside the New York Stock Exchange, Monday, July 15, 2013 in New York. Weaker-than-expected U.S. retail sales sent most world stock markets lower Tuesday July 16, 2013 as investors awaited congressional testimony from Federal Reserve chairman Ben Bernanke later in the week.
AP Photo/Mark Lennihan

Updated at 4:02 p.m. ET

NEW YORK The Standard & Poor's 500 index closed above 1,700 points for the first time, as stocks jumped on brighter U.S. jobs data and upbeat economic signals in Asia.

The S&P 500, which investors follow closely as a gauge for the rest of the market, gained 21 points, up 1.2 percent, to close at 1,707 points. The Dow Jones industrial average also hit a record high, adding 127 points to 15,627. The Nasdaq composite index ended at 3,676, up 49 points.

There were several driving forces for the market's advance. A jump in a key gauge of China business sentiment helped push up Asian markets overnight. Then, an hour before the U.S. stock market opened, the Labor Department said the number of Americans seeking unemployment benefits dropped last week to the lowest since 2008, another positive sign for the U.S. jobs market. Earnings gains at several U.S. companies also helped drive the stock market higher.

Investors know that employment figures that track just a week are volatile, but it was still a surprisingly strong number. Economists are likely rethinking their estimates on July job growth, numbers that the government will release Friday.

The S&P 500 had never closed above 1,700, nor had it crossed that mark in intraday trading. Previously, its highest close was 1,695.52 on July 22.

The market gains don't mean that investors think the economy is healed. Rather, they think it's better than it was, and that's been enough to push stocks higher.

For example, earnings of S&P 500 companies are up about 5 percent this quarter, and revenue is down 0.5 percent, according to S&P Capital IQ. In previous eras, that hardly would have been considered stellar growth. Earnings rose 9 percent, and revenue 6 percent, in the second quarter of 2007, before the financial crisis imploded.

"They're not great numbers, but they're positive and they're continuing to grow," said Tim Courtney, chief investment officer of Exencial Wealth Advisors in Oklahoma City. "That's about all the market needs to hear."

Several U.S. companies rose earlier in the trading session after reporting earnings gains late Wednesday or early Thursday.

CBS rose $2.10, or 4 percent, to $54.91 after reporting an 11 percent jump in income, after the market closed Wednesday, beating analysts' estimates. CBS is making more money licensing its shows to online streaming providers such as Netflix and from increasing the fees it receives from cable and satellite TV distributors to retransmit its programming.

Allstate rose $1.30, or 2.6 percent, to $52.28 after the insurer reported higher profits in the second quarter, benefiting from higher revenue and plus lower catastrophe-related losses.

The S&P 500 has made the jump from 1,600 to 1,700 in less than three months. The index first traded above 1,600 May 3. The previous 100-point gain took much longer to achieve. The index first closed above 1,500 more than a decade ago, toward the end of the dot-com bubble in March 2000.

The index then lost almost half of its value over the next two years before rebounding in the four-year bull run that preceded the financial crisis. That rally ended in October 2007 when the S&P 500 was just short of the 1,600 level. Stocks then slumped and the S&P 500 fell as low 676.53 in March 2009 before commencing its current bull run.

Courtney said that S&P milestone hardly represented a new era. Since 1950, the S&P 500 has hit a new high about 7 percent of the time, or an average of about every 15 days, he said.

The market's advance on Thursday was a contrast from the lethargy of the past few days. On Tuesday and Wednesday, the S&P 500 moved less than a point each day. On Tuesday, it was because investors didn't want to make a move before the Federal Reserve's policy announcement scheduled for the next day.

On Wednesday, it was because the Fed didn't make much of a move: It said, unsurprisingly, that the U.S. economy was recovering but still needed help, and didn't give any indication of when it might cut back on its bond-buying program, which has been supporting financial markets and keeping borrowing costs ultra-low.

The price of crude oil rose $2.69, or 2.6 percent, to $107.71 a barrel. Gold slipped 20 cents to $1,312 an ounce. The dollar rose against the euro and the Japanese yen.

In U.S. government bond trading, the yield on the 10-year Treasury note rose to 2.66 percent from 2.58 percent late Wednesday.