May 28, 2017

Dow Closes Above 14,000 for First Time Since 2007

The Dow had been rising steadily for about a month. With auto sales strong and optimism about the jobs market high, the index was only 155 points away from its highest nominal close.

“There’s a newfound enthusiasm for the equity market,” said Jim Russell, regional investment director at U.S. Bank Wealth Management in Minneapolis.

The Dow ended Friday 149.21 points higher, at 14,009.79. The Standard Poor’s 500-stock index rose 15.06 to 1,513.17, and the Nasdaq composite index was up 36.97, to 3,179.10.

Auto sales helped. Toyota, Ford, General Motors and Chrysler all reported double-digit gains for January. The government jobs report that was released Friday was mixed, but traders seemed to focus on the positive.

The Labor Department said 157,000 jobs were added in January, which was in line with expectations. Unemployment inched up to 7.9 percent from 7.8 percent in December, but many economists were encouraged because the government now says that hiring over the last year was higher than originally thought.

The jobs number is based on a survey of employers, and the unemployment rate is based on a separate survey of households, which is why they can diverge.

Market watchers were divided over what the potential for a new high really meant for the Dow. To some, it was a reason for optimism.

“The Dow touching 14,000 — it matters psychologically,” said Peter Cardillo, chief market economist at Rockwell Global Capital in New York. “It attracts smaller investors.”

Those investors had been shying away from stocks. Since April 2011, investors have pulled more cash out of stock mutual funds than they have put in, according to the Investment Company Institute, a trade association. In the last three weeks, though, that trend has reversed, which could make January the first month in nearly two years when stock-focused funds had more money flowing in than flowing out.

To others, 14,000 was nothing but a number, and not even the best number on the board. Professional investors usually pay more heed to the S. P. 500.

Joe Gordon, managing partner at Gordon Asset Management in Durham, N.C., says he does not think the gains will last. The fact that small investors are piling back in, he said, is a sign that the market has attracted too much optimism and is headed for a fall.

After the Dow hit its high in 2007, it fell almost steadily for the next year and a half, losing more than half its value before starting to tick back up.

The Treasury’s benchmark 10-year note fell 9/32, to 96 15/32, and the yield rose to 2.03 percent from 1.98 percent Thursday.

Before Friday, the Dow had closed above 14,000 just nine times. The first time was in July 2007; the rest were in October of that year.

Article source: http://www.nytimes.com/2013/02/02/business/daily-stock-market-activity.html?partner=rss&emc=rss

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