May 7, 2013

Dow closes above 15,000 for first time

The Associated Press

click image to enlarge

A specialist works at his post on the trading floor of the New York Stock Exchange on Tuesday. His screen shows the closing number for the Dow Jones industrial average, which topped 15,000 at the end of trading for the first time.

The Associated Press

click image to enlarge

A board on a trading post on the floor of the New York Stock Exchange shows the Dow Jones industrial average with an intraday number above 15,000 on Tuesday.

The Associated Press

NEW YORK — The Dow Jones industrial average punched through another milestone Tuesday, closing above 15,000 for the first time just two months after recovering the last of its losses from the 2008 financial crisis.

Good economic reports, strong corporate earnings and fresh support from central banks helped ease investor concerns about another economic slowdown. Many had been on the lookout for signs that a spring swoon would derail the rally, as happened in each of the past three years.

Instead, the Dow continued its epic ascent of 2013, which has seen it climb 1,952 points – almost 15 percent – since Jan. 1.

"The thing that's been driving stocks is rising confidence," said James Paulsen, chief investment strategist at Wells Capital Management. "Economic growth, job creation and the housing market have been better than expected."

The Dow closed at 15,056.20, up 87.31 points, or 0.6 percent. The Standard & Poor's 500 index added 8.46 points to a record 1,625.96, a gain of 0.5 percent. It has jumped 199 points this year, or 14 percent.

The record close extends the stock market's comeback from the depths of the financial crisis. Both indexes reached all-time highs earlier this year, then kept rising, largely driven by optimism that the U.S. economy will keep gaining strength.

"We don't think people are giving enough credit to the strength of the economy," said Ryan Detrick, a senior technical strategist at Schaeffer's Investment Research. "We still like the market."

Detrick said he was particularly encouraged by the resurgence in smaller stocks, which suggested a broad recovery beyond larger companies. The Russell 2000 index gained eight points to close at 967.82. It has risen 14 percent this year.

The S&P has climbed higher for six straight months – the longest stretch of gains since a seven-month run that started in March 2009, when the market hit a financial crisis low, and ended in October 2009.

All 10 industries in the S&P 500 have joined in the rally. Health-care companies have led the way, up 19 percent.

The Dow, S&P 500 and Russell 2000 index of small companies are all at record highs. The sole exception is the tech-heavy Nasdaq, which remains far below the peaks it scaled in the dot-com bubble.

Six years have passed since the Dow closed above 14,000 for the first time.

Tuesday's gains piled up with the growing realization among investors that the traditional threats to a rising market – higher interest rates, falling profits, a possible recession – are unlikely to appear anytime soon. What's more, with interest rates near record lows, investors see few other places to put their money.

In a round of interviews on Monday, investor Warren Buffett said the stock market looked "reasonably priced" even after its surge. But, Buffett added, people pay too much attention to markets reaching highs. They ought to pay attention when markets hit new lows.

"That's when stocks are getting cheaper," Buffett told CNBC. "That's when stocks are going on sale. But people do get more excited when they see new highs."

More than 400 of the S&P 500 companies have turned in first-quarter results, and 7 out of 10 have beaten Wall Street's earnings expectations, according to S&P Capital IQ. Those analysts estimate that earnings increased 5 percent in the first quarter and will pick up their pace through the rest of the year.

News of stronger hiring over the past three months briefly propelled the Dow over 15,000 on Friday, but it ended the week below that mark.

On Tuesday, the U.S. market followed Japanese and European indexes higher after they responded to good news about central bank stimulus and the German economy. The U.S. also got a lift from higher quarterly profits at satellite TV company DirecTV and watchmaker Fossil.

(Continued on page 2)

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