Dow reaches highest close since December 2007

NEW YORK – The stock market rose again Friday because of economic help from the Federal Reserve. But even some of the buyers weren’t believers.

The Dow Jones industrial average hit its highest close since December 2007, the start of the Great Recession. The Russell 2000 index of smaller companies briefly traded above its all-time closing high.

Markets rallied around the world in places where traders were getting their first chance to react to the Fed announcement: Stocks climbed more than 2 percent in India and France and almost 2 percent in Japan and Germany.

The gains came on top of a 206-point climb for the Dow on Thursday, when the Fed laid out additional plans to try to energize the economy, including buying $40 billion a month in mortgage bonds for as long as necessary.

But a day later, even with the market rising, plenty of investors were unconvinced. They bought stock, but they also worried that the Fed can’t do much to fix the economy and predicted that the stock market gains would be short-lived.

The Dow ended up 53.51 points to 13,593.37. It is a 4 percent rally away from its all-time high of 14,164, reached Oct. 9, 2007.

The Standard & Poor’s 500 rose 5.78 to 1,465.77, almost exactly 1,000 points below its all-time high. The Nasdaq composite index, which has been trading at the highest levels since 2000, climbed 28.12 to 3,183.95.

Credit firm downgrades rating on U.S. government debt

NEW YORK – Egan-Jones, an independent credit-research firm, downgraded its rating on U.S. government debt to AA- from AA on Friday, citing the Federal Reserve’s plans to try to stimulate the economy.

The credit rating agency said the Fed’s plans to buy mortgage bonds will likely hurt the economy more than help it. The plan will weaken the value of the dollar and push up prices for oil and other commodities, Egan-Jones said. That would leave less for consumers to spend on other things.

It’s the second time the Haverford, Pa., shop has downgraded U.S. government debt in five months. In April, Egan-Jones lowered its rating on the U.S. to AA from AA+. It stripped the U.S. of a top AAA rating in July 2011.

Sean Egan, the company’s founder, has long railed against the power of the three major rating agencies, Moody’s Investors Service, Standard & Poor’s and Fitch Ratings. Egan-Jones Rating Co. is one of 10 firms the Securities and Exchange Commission recognizes as a rating organization..

Dow Jones dumps Kraft Foods to add insurance company

NEW YORK – The Dow Jones industrial average is dumping Cool Whip for co-pays.

The Dow, perhaps the most widely known barometer of the U.S. stock market, announced Friday that it would boot Kraft Foods to make room for UnitedHealth Group, the insurance company.

The change takes effect Sept. 24. S&P Dow Jones Indices, which manages the average, said it was dropping Kraft because it is about to become a much smaller company after spinning off its North American grocery business.

The shuffle will not affect the level of the Dow, which closed Thursday above 13,500 and at a four-year high. The formula used to calculate the average is recalibrated every time a company is added or dropped.

— From news service reports