Stock index hits five-year high

NEW YORK – The Standard & Poor’s 500 closed at its highest level in five years Friday after a report showed that hiring held up in December, giving stocks an early lift.

The S&P 500 finished up 7.10 points at 1,466.47, its highest close since December 2007.

The index began its descent from a record close of 1,565.15 in October 2007, as the early signs of the financial crisis began to emerge. The index bottomed out in March 2009 at 676.53 before staging a recovery that has seen it more than double in value and move to within 99 points of its all-time peak.

The remarkable recovery has come despite a halting recovery in the U.S. economy as the Federal Reserve provided huge support to the financial system, buying hundreds of billions of dollars’ worth of bonds and holding benchmark interest rates near zero. Last month the Fed said it would keep rates low until the unemployment rate improved significantly.

“Without the Federal Reserve doing what they did for the last few years, there would be no way you’d be near any of these levels in the index,” said Joe Saluzzi, co-head of equity trading at Themis Trading. “I would call this the Fed-levitating market.”

The Dow Jones industrial average finished 43.85 points higher at 13,435.21. It gained 3.8 percent for the week, its biggest weekly advance since June. The Nasdaq closed up 1.09 point at 3,101.66.

Stocks have surged this week after lawmakers passed a bill to avoid a combination of government spending cuts and tax increases that have come to be known as the “fiscal cliff.” The law passed late Tuesday night averted that outcome, which could have pushed the economy back into recession.

Stocks may also be benefiting as investors adjust their portfolios to favor stocks over bonds, said TD Ameritrade’s Kinahan. A multi-year rally in bonds has pushed up prices for the securities and reduced the yield that they offer, in many cases to levels below company dividends.