CullmanTimes.com - Cullman, Alabama

Business

March 5, 2013

Dow Jones industrial average surges to record

NEW YORK — The Dow has never been higher.

The Dow Jones industrial average surged passed its all-time high and kept going on Tuesday. It jumped up from the opening bell, climbed as much as 158 points early and reached 14,286, breaking through its previous record high set in October 2007.

The index fell back slightly and was trading up 136 points, or less than 1 percent, at 14,264 as of 12:35 p.m. EST.

The gains represent a remarkable comeback for the stock market. The Dow has more than doubled since falling to a low of 6,547 in March 2009 following the financial crisis and the Great Recession. Stocks have rebounded sharply since then with the help of a large dose of stimulus from the Federal Reserve, even as the economic recovery has been slow and steady rather than spectacular.

"Whether they want to admit it or not, everyone is very impressed with the resilience of the market," said Alec Young, a global equity strategist at S&P Capital IQ.

The last time the Dow was this high, Apple had just sold its first iPhone and George W. Bush had another year as president. The U.S. housing market had yet to implode, and the financial crisis that brought down Lehman Brothers was still a year away.

The recovery in stocks may even have been quicker, had memories of the financial system's near collapse not been on investors minds, says Robert Pavlik, chief market strategist at Banyan Partners.

"It's still pretty close to the front of people's brains," says Pavlik. "That's one of the reasons that people are hesitant to invest in the stock market."

Despite the gains in the stock market since then, the U.S. economy has not fared nearly as well. Unemployment was just 4.7 percent when the Dow last reached a record five and half years ago, versus 7.9 percent today.

But the economy is strengthening in many areas. Housing is recovering, companies are hiring more and Corporate America's earnings are strong. That's fueled a 9 percent rise in stocks this year, impressing even the most ardent skeptics. For all of last year, the index rose 7 percent.

Stocks are also benefiting from the economic stimulus from the Federal Reserve and other global central banks. The U.S. central bank is buying $85 billion each month in Treasury bonds and mortgage-backed securities to keep long-term interest rates very low.

If the Dow continues Tuesday at its torrid pace, it will finish above its record close of 14,164 from Oct. 9, 2007.

Tuesday's gains were driven by industrial and technology stocks. United Technologies rose $2.10 to $91.22, IBM advanced $1.84 to $207 and 3M rose $1.46 to $104.70, pushing the Dow higher.

That's a signal that investors are optimistic about the economy, since those companies stand to gain the most when the economy recovers. More stable, conservative stocks like utilities and consumer staples logged smaller gains.

From its March 2009 low to today, gains for the 30-member Dow have been led by American Express, up almost 500 percent. Home Depot has jumped almost 300 percent, according to data from S&P Dow Jones Indices. Hewlett Packard is the only stock in the index that is lower than it was four years ago, falling 22 percent.

On Tuesday, investors received another piece of positive news on the U.S. economy, a report that U.S. service companies grew in February at the fastest pace in a year, thanks to higher sales and more new orders. The gain suggests higher taxes have yet to slow consumer spending on services.

Home builder PulteGroup rose 42 cents to $20.12 following news that home prices rose at the fastest pace in almost six years in January, a sign that the housing market is gaining momentum as it nears the spring selling season. Home prices rose 9.7 percent in January from a year ago and had the biggest gain since April 2006, according to data released by CoreLogic

The Standard & Poor's 500 index rose 16 points, or 1 percent, to 1,541, within striking distance of its own record close of 1,565. The Nasdaq composite gained 41 points, or 1.3 percent, to 3,223.

The yield on the 10-year Treasury note, which moves inversely to its price, rose two basis point to 1.90 percent.

Among other stocks making big moves:

— Ascena Retail Group gained $2.30 to $18.84 after the clothing store reported stronger-than-expected sales in its most recent quarter.

— J.C. Penney fell $1.52 to $15.21 following media reports that one of its largest shareholders is selling a major stake in the retailer. CNBC and The Wall Street Journal reported that Deutsche Bank is shopping around the sale of 10 million shares of the company's stock held by Vornado Realty Trust, a real estate investment trust.

 

1
Text Only
Business
  • Long-term unemployed are still strong hires, study shows

    People who have been out of work for an extended period, once hired, tend to be just as productive on the job as those with more typical work histories, according to an analysis of almost 20,000 employees.

    April 4, 2014

  • CEMS groundbreaking CEMS holds groundbreaking

    March 31, 2014 1 Photo

  • Cook Social Worker of Year.jpg Cook chosen as Public Social Worker of the Year

    Angel Cook of the Cullman County Health Department was selected as Public Health Social Worker of the Year for 2014. She was recognized March 7 at the Public Health Social Work Seminar held in Montgomery.
     

    March 15, 2014 1 Photo

  • news_google.jpg First Apple, now Google hit with kids' app lawsuit

    Last month, 4- and 5-year-old brothers in New York quickly spent $65.95 in real money to buy virtual goods in Marvel's Run Jump Splash game on the family tablet. They were able to rack up the charges without entering a password. And for that, the boys' mother has joined a class-action lawsuit filed Tuesday against Google, accusing the company of deceiving consumers about its in-app purchase system, which critics say makes it too easy for kids to spend money on their Android devices.

    March 14, 2014 1 Photo

  • Alfa honors Ford.jpg Alfa Insurance honors local agent

    Alfa Insurance Agent Whit Ford of West Point received the Distinguished Service Award – Bronze Level for 2013 during the company’s annual awards ceremony in Birmingham.

    March 12, 2014 1 Photo

  • biz_target.jpg Target seeks new technology head after data breach

    Target Corp., still reeling from a security breach that exposed the personal information of tens of millions of customers, is seeking a new top technology executive to help prevent future attacks.

    March 7, 2014 1 Photo

  • 20140306-AMX-STAPLES6.jpg Staples to close 225 stores as online competition hurts sales

    Staples Inc., the largest U.S. office-supplies chain, will close as many as 12 percent of its North American stores and cut as much as $500 million in costs as online competition continues to hurt sales.

    March 6, 2014 1 Photo

  • Five things you should know about the Netflix-Comcast deal

    Now Comcast and Netflix have announced that they will directly interconnect their networks, rather than having Netflix traffic flow first through a third-party network. With this, another layer of Internet architecture - interconnection and peering - is under the microscope.

    February 28, 2014

  • thomspon to relocate.jpg Kristin (Brown) Thompson with Strong LLC relocating to NYC to open new office

    Strong Advertising Agency, announced that Kristin, a 2007 Cullman High School graduate, has opened a new office in Manhattan and working in the New York/New Jersey area serving as the marketing contact for advertising clients for merchandising and creative content development. She began working at Strong, LLC in Birmingham as an Account Executive Assistant in 2012 and was promoted to Account Executive after 6 months of employment.
     

    February 25, 2014 1 Photo

  • 01.jpg US News names its 'Best Cars for the Money'

    U.S. News & World Report Wednesday announced its annual Best Cars for the Money list on its Best Cars website.

    February 13, 2014 1 Photo

Facebook
AP Video