S&P Index closes above 1500 for the first time in 5 years!

Most of the world’s stock markets advanced again this week, continuing the rally that has been in place since the beginning of the year. Positive economic data and encouraging corporate earnings supported share prices.

Wall Street’s S&P 500 Index broke the 1,500 barrier for the first time in five years, while Canada’s S&P/TSX Composite neared its highest level in 18 months. Major global indexes are at their best levels in 20 months. European stocks are at their highest point since February 2011.

Evidence that the U.S. economy is gaining steam continued to mount. A survey showed the strongest growth in factory activity in almost two years in January and the number of new jobless benefits claims dropped to a five-year low last week.

U.S. fourth-quarter corporate earnings continue to exceed expectations, with about two-thirds of companies beating estimates at this early stage. However, disappointing results hurt the U.S. information technology sector. In Canada, the tech sector gained as a major player continues a strong advance based on a new product introduction expected next week.

A positive reading on Chinese manufacturing strengthened the case for an improving economy there. A much-watched survey of purchasing managers rose to its highest level since early 2011. Among Asian markets, Japan’s key equity index reached its best close since May 2010, helped by a 2.9% surge Friday. Exporters continue to benefit from a falling yen and a pledge by Japan’s central bank to more aggressively stimulate the economy.

The Bank of Canada sent a strong signal that interest rates will not be headed higher soon. Governor Mark Carney indicated the next direction for rates will be up, but slow economic growth and low inflation mean the central bank will adhere to its course of historically low rates for now. Canadian inflation held steady at a three-year low of 0.8% y-o-y in December. The central bank said the Canadian economy would grow by 2% this year on the heels of estimated growth of 1.9% in 2012.