Dow within 100 of 13,000 as stocks barrel higher

CHRISTINA REXRODE

AP Busi­ness Writer

NEW YORK — Investors sent U.S. stocks bar­rel­ing to their high­est lev­els of the year Thurs­day, buoyed by sliv­ers of encour­ag­ing news about jobs and hous­ing. At least for a day, they over­looked the lack of clar­ity about Greece’s marathon nego­ti­a­tion for a bailout.

The Dow Jones indus­trial aver­age rose 123.13 points to close at 12,904.08, its third triple-digit gain this year. It was the high­est close for the Dow since May 19, 2008, four months before the worst of the finan­cial crisis.

As the Dow moved to within sight of 13,000, applause broke out at the clos­ing bell on the floor of the New York Stock Exchange.

The Stan­dard & Poor’s 500 rose 14.81 points to 1,358.04, its high­est close in nine and a half months. The Nas­daq com­pos­ite, which has had an even stronger year than the Dow and S&P and is trad­ing at its high­est since 2000, rose 44.02 points to 2,959.85.

The rally was broad, with all but one of the 30 stocks in the Dow, Kraft Foods, clos­ing higher. All 10 indus­try groups in the S&P were com­fort­ably higher, led by mate­ri­als stocks, includ­ing strong show­ings from DuPont and Dow Chemical.

Gen­eral Motors was among the best-performing stocks of the day. Two years after it was almost wiped out, the com­pany turned a record $7.6 bil­lion profit last year, big­ger even than when Amer­i­cans couldn’t stop buy­ing trucks and SUVs.

Microsoft rose 4 per­cent, as did Bank of Amer­ica, which tends to swing wildly with the market.

The Labor Depart­ment said weekly appli­ca­tions for unem­ploy­ment ben­e­fits dropped for the fourth time in five weeks to the low­est point since March 2008. That was when the job­less rate was just 5.1 per­cent, far below the cur­rent rate of 8.3 percent.

Con­struc­tion of single-family homes cooled slightly in Jan­u­ary, but a rise in per­mits sug­gested builders were grow­ing more con­fi­dent that more buy­ers are ready to come off the sidelines.

There are doubts about how long the momen­tum can be sus­tained, and even ques­tions about what’s sus­tain­ing it.

The mar­ket has seemed deter­mined to move higher this year, despite mostly incre­men­tal and vague news about the Greek debt cri­sis and sometimes-conflicting reports on the U.S. economy.

“I think we’re float­ing on air. There’s not much going on,” said Ben Schwartz, chief mar­ket strate­gist at Light­speed Financial.

He warned that there could be volatil­ity ahead for the mar­ket. The Dow has yet to suf­fer a 100-point loss this year, a sharp con­trast to the triple-digit swings that were com­mon last summer.

John Burke, pres­i­dent of Burke Finan­cial Strate­gies in New Jer­sey, said he thinks the Fed­eral Reserve has been arti­fi­cially prop­ping up the mar­ket with cheap money gen­er­ated by low inter­est rates.

Burke warned that the low rates could allow the U.S. to put off reduc­ing its bud­get deficit.

“They’re push­ing the prob­lem off,” Burke said. “We’re fine today, we’ll avoid reces­sion, but what’s that going to do to us when the term is up?”

Gas prices could be a threat for the U.S. econ­omy, par­tic­u­larly as Iran threat­ens to cut exports. The aver­age price for a gal­lon of gaso­line is $3.52, the high­est on record this time of year, and could climb to $4.25 a gal­lon by late April.

But oth­ers thought the pos­i­tive jobs and hous­ing reports will con­tinue to be what sways the market.

“The more impor­tant story is what clearly is a con­tin­u­ing U.S. recov­ery,” said Tim Speiss, chair­man of per­sonal wealth advis­ers at Eis­ner­Am­per. “I could go find some neg­a­tive news report, but it would go against what investors are doing.”

The hope­ful signs about the econ­omy increased investors’ appetite for higher-risk invest­ments like stocks, and they moved money out of bonds to make room in their portfolios.

The yield on the government’s bench­mark 10-year Trea­sury note, which moves in the oppo­site direc­tion from its price, was at 1.92 per­cent before the report on job­less claims. It jumped to 1.96 per­cent in minutes.

A sep­a­rate report found that whole­sale prices, exclud­ing the volatile food and energy cat­e­gories, increased 0.4 per­cent in Jan­u­ary, the most in six months. Infla­tion gen­er­ally hurts Trea­surys by reduc­ing the buy­ing power of the fixed returns they pay.

Also just before the jobs news came out, the euro was sit­ting at a three-week low against the dol­lar. But it ral­lied almost a full penny, to $1.3143 from $1.3063 late Wednesday.

The euro is per­ceived to be a riskier invest­ment than the dol­lar, and traders tend to buy riskier cur­ren­cies and sell safer ones when they per­ceive the eco­nomic sit­u­a­tion to be get­ting better.

As it has for many days, the Greek cri­sis plod­ded along with­out any cer­tainty. The dif­fer­ence this time was that investors didn’t seem to care. Euro­pean finance min­is­ters will dis­cuss the Greek bailout at a meet­ing Monday.

Greece is nego­ti­at­ing for breaks on loans due next month in addi­tion to the bailout, which would be aimed at pre­vent­ing a bank­ruptcy that could send a shock through the world finan­cial system.

But some investors are grow­ing com­pla­cent: They either have faith that the Euro­pean Union will find a way to keep Greece from default­ing, or they think Greece will default but it won’t mat­ter to the rest of Europe.

Among other stocks mak­ing big moves:

— J.M. Smucker plum­meted 8 per­cent after the com­pany missed ana­lysts’ esti­mates for net income and rev­enue. The com­pany said its sales vol­ume fell 10 per­cent because it raised prices for Jif peanut but­ter, Fol­gers cof­fee and Crisco.

— Mol­son Coors rose 3 per­cent after the beer maker beat ana­lysts’ expec­ta­tions, helped by higher sales of Mod­elo beer in Japan and Coors Light in Latin Amer­ica and China.

— Tech stocks rose 1.57 per­cent, behind only mate­ri­als com­pa­nies as the biggest gain­ers for the day. Some ana­lysts think that tech will prove a wise invest­ment because com­pa­nies, sit­ting on cash that they are ner­vous about invest­ing oth­er­wise, will plow it into new tech­nol­ogy. Groupon rose 4 percent.

Posted by AP News on Feb 16 2012. You can follow any responses to this entry through the RSS Feed. Comments can be made below.