Dow average closes within 50 points of 13,000

Traders Mario Innella, left, and Anthony Ric­cio work on the floor of the New York Stock Exchange. Stock mar­kets advanced Fri­day, Feb. 17, on hopes that Greece would soon get its cru­cial sec­ond bailout and fol­low­ing another batch of upbeat U.S. eco­nomic news. (AP Photo/Richard Drew, File)

CHRISTINA REXRODE

AP Busi­ness Writer

NEW YORK — The Dow edged teas­ingly close to the 13,000 marker on Fri­day, a mile­stone it hasn’t reached since before the finan­cial cri­sis brought the U.S. econ­omy to its knees.

The Dow Jones indus­trial aver­age rose 45.79 points, or 0.4 per­cent, to close at 12,949.87, its high­est close for the year so far. That fol­lowed a 123-point surge the day before, when it also set a clos­ing record for 2012.

The rest of the mar­ket strug­gled for direc­tion on what turned out to be a quiet news day as traders pre­pared for the long Pres­i­dents’ Day week­end. The Stan­dard & Poor’s 500 rose 3.19 points, or 0.2 per­cent, to 1,361.23, also set­ting a record close for 2012. The Nas­daq com­pos­ite, after surg­ing Thurs­day, fell 8.07 points, or 0.3 per­cent, to 2,951.78. Greek debt talks idled and a key eco­nomic indi­ca­tor, U.S. con­sumer prices, came in at about what ana­lysts were expecting.

The Dow hasn’t closed above 13,000 since May 19, 2008, a time when the Bush admin­is­tra­tion was still in charge, Lehman Broth­ers and Mer­rill Lynch still existed, and unem­ploy­ment was just 5.4 per­cent, com­pared to the cur­rent 8.3 percent.

Though 13,000 in some ways would be just a num­ber on a board, with no direct bear­ing on the fun­da­men­tals of the econ­omy, its psy­cho­log­i­cal effect could still be impor­tant. Peo­ple and busi­nesses tend to spend based on how they feel about the econ­omy, and big round num­bers can affect feel­ings just as much as money in the wallet.

“It’s not an insignif­i­cant psy­cho­log­i­cal bar­rier,” said Marc Scud­illo, man­ag­ing offi­cer at Eis­ner­Am­per in New Jer­sey. “Peo­ple still need to have that vote of con­fi­dence that invest­ing in U.S. com­pa­nies is still the right direc­tion to go long-term.”

On the other hand, pop­ping up to 13,000 could also have a con­tra­dic­tory effect on the Dow. It would almost cer­tainly trig­ger require­ments in some invest­ment firms to sell off some of their stocks, which could briefly push the index back down.

By some accounts, the mar­ket is stalling out under the weight of con­flict­ing head­lines about the U.S. econ­omy and about Greece, which is try­ing to secure res­cue loans from other Euro­pean coun­tries so it won’t default on debt due next month.

Though recent news about job­less claims and hous­ing starts have been incre­men­tally bet­ter, they’re still far below where they need to be for a full recov­ery. Greece and its lenders no sooner ham­mer out one por­tion of a debt deal before they find some­thing else to dis­agree on. In the 33 trad­ing days of 2012 to date, the Dow has risen on 19 and fallen on 14.

“Today is just wait­ing to see what’s next,” said San­jeev Bho­jraj, an account­ing pro­fes­sor at Cornell’s John­son busi­ness school. “You don’t know which way to go — you’re hop­ing the news will help you fig­ure it out.”

For the most part, the mar­ket has moved higher this year, despite wor­ries that the rally is being dri­ven just by emo­tion rather than eco­nomic fun­da­men­tals. The Dow is up 6 per­cent in the first seven weeks of this year. In all of 2011, it rose 5.5 percent.

Some of that could be an early-year pop. Last year, all three major indexes rose in the first quar­ter before giv­ing up at least some of those gains by year’s end.

The yield on the bench­mark 10-year Trea­sury note rose to 2.01 per­cent from 1.99 per­cent late Thurs­day. That’s a sign that investors are mov­ing money out of safe-haven gov­ern­ment bonds and into riskier invest­ments like stocks.

Major Euro­pean indexes rose, includ­ing a 5 per­cent surge in Greece’s ATHEX. The euro rose slightly to $1.32, indi­cat­ing con­fi­dence in Europe.

There were some encour­ag­ing signs that Greece could secure its bailout deal next week. The finance min­is­ters of the euro zone coun­tries are meet­ing Mon­day to final­ize the terms. A spokesman for Ger­man Chan­cel­lor Angela Merkel said that she as well as the lead­ers of Greece and Italy are “opti­mistic” that a deal can be reached.

Among stocks mak­ing big moves:

— Camp­bell Soup rose 3 per­cent after beat ana­lysts’ expec­ta­tions for quar­terly earn­ings. The com­pany is in the midst of a turn­around plan that includes adding more expen­sive, higher-quality soups and broad­en­ing offer­ings in its snack, bev­er­age and other categories

— H.J. Heinz rose 5 per­cent after beat­ing expec­ta­tions for quar­terly earn­ings and rev­enue. The ketchup maker was helped by a big sales increase in emerg­ing mar­kets like China, Rus­sia and Latin America.

— Madi­son Square Gar­den jumped in after­noon trad­ing after reports cir­cu­lated that it had reached an agree­ment with Time Warner Cable to let Time Warner cus­tomers view MSG sports pro­gram­ming. That ends a black­out that infu­ri­ated cus­tomers anx­ious to watch New York Knicks point guard Jeremy Lin. Madi­son Square Gar­den was flat for most of the day before ris­ing to close up 3 percent.

— Gilead Sci­ences plunged 14 per­cent after the drug­maker said a promis­ing hepati­tis C treat­ment it recently acquired may have to be used with other drugs in patients with the dis­ease. The com­pany said some patients in a small part of a mid-stage study relapsed within a month of com­plet­ing the treatment.

Posted by AP News on Feb 17 2012. You can follow any responses to this entry through the RSS Feed. Comments can be made below.