Stock market: After almost 4 years, Dow cracks 13000
The stock market hit a big milestone Tuesday, as the Dow Jones industrial average hit 13000 for the first time since 2008. The stock market got the final push from strong corporate earnings reports and a Greek bailout deal.
The Dow Jones industrial average crossed 13,000 on Tuesday for the first time since May 2008, when the Lehman Brothers investment bank was solvent, unemployment a healthy 5.4 percent and the worst of the Great Recession months ahead.
The milestone came about two hours into the trading day. The stock market got the final push from strong corporate earnings reports and a Greek bailout deal intended to prevent the next financial crisis.
The average was above 13,000 for about 30 seconds before dropping back. It reclaimed the mark just after noon.
The Dow last closed above 13,000 on May 19, 2008. The next day, it crossed under 13,000, not to return for almost four years. The Dow fell as low as 6,547 on March 9, 2009. It has almost doubled since then.
The 13,000 level is a psychological milepost, but in a market built on perception, it could influence more cautious investors to pump more money back into the stock market, analysts said.
"You need notches along the way to measure things, and that's as good as any," said John Manley, chief equity strategist for Wells Fargo's funds group. "Is 50 older than 49 and a half? Yes, by six months. Do those six months really make a difference? Probably not. But it does give us a fixed point, something we can look at."
Dan McMahon, director of equity trading at Raymond James, called the 13,000 marker a "positive catalyst, and that's what we need to get us through the next range." In the end, he said, it's just "a big round number."
Stocks dropped back slightly after hitting the mark, then returned to it just after noon. The Dow was up 54 points at 13,004. In other trading, the Standard & Poor's 500 was up seven points at 1,368. The Nasdaq composite index was up 13 at 2,965.
Just last summer, the Dow unburdened itself of 2,000 points in three terrifying weeks. S&P downgraded the United States credit rating, Washington was fighting over the federal borrowing limit, and the European debt crisis was raging.
The Dow fell as low as 10,655 in the fall. The 13,000 marker is a 22 percent rally from that low. The Dow is within 1,200 points of its all-time closing high — 14,164, set Oct. 9, 2007.
From here, it would take a 9 percent rally for the Dow to hit an all-time high. The S&P, a broader reading of the market, would need a bigger rally, 15 percent from here, to set a record.
Under the bailout deal, Greece will get €130 billion, or about $172 billion, from other European nations and the International Monetary Fund. In a separate deal, it will owe €107 billion less to investors who own its government bonds.
After months of the talks crawling along and vague headlines yanking the market up and down, the conclusion was almost anticlimactic because an agreement was already expected by the markets.
European markets fell after the Greece deal was announced. Stocks were down almost 4 percent in Greece, a little more than 1 percent in Spain and less than 1 percent in France and Britain. But the euro rose slightly to $1.32, which could be seen as a sign of confidence in European markets.
Investors noted that Greece remains in deep recession. Its bond investors will take a 53.5 percent loss on the face value of their bonds, which could discourage future investment.
The U.S. stock market has climbed steadily this year, primarily because of optimism about the economy. High gasoline prices are emerging as a chief concern for the economic recovery for the rest of the year, though.
A gallon (3.8 liters) of regular costs $3.57 on average, 40 cents more than a year ago and the highest on record for this time of year. With tension building over Iran's nuclear ambitions, Iran has halted oil exports to Britain and France and threatened to stop shipping to other European countries.
On Tuesday, U.S. markets enjoyed strong earnings reports from several big-name companies, including Home Depot and Dollar Thrifty. The exception was Wal-Mart, which reported a 15 percent drop in quarterly profits.
Overall, though, investors seemed comfortable moving money into the higher-risk stock market and out of safer investments like government bonds. The yield on the government's benchmark 10-year Treasury note rose to 2.05 percent from 2.01 percent Friday, a sign that fewer investors wanted the bonds.
Materials stocks and energy companies led the market higher Tuesday. Health care companies, makers of consumer staples and utilities, traditionally stocks to own in more cautious times, were lower.
Among the big movers:
— Wal-Mart fell 4 percent after missing analysts' expectations for revenue and per-share earnings. The world's biggest retailer has lost some of its momentum in the past couple of years with strategic errors. They included a brief foray away from "everyday low prices" and an attempt to declutter its shelves that turned off customers who went there for the convenience.
— Home Depot rose 1.5 percent after beating analysts' expectations for revenue and per-share earnings. The home-repair company has been hurt by the dour housing market, which has led homeowners to take on fewer expensive home renovations. Warm weather helped drive small-scale home projects in the latest quarter.
— Barnes & Noble fell 1.4 percent after missing expectations on revenue and per-share earnings. Rising costs offset higher sales of both traditional books and digital books. Investors seemed encouraged that the bookstore chain, a survivor in an era that has felled competitors like Borders and Waldenbooks, plans to introduce a cheaper Nook to compete with Amazon's Kindle Fire.
— Macy's, the department store chain, rose 5 percent after beating earnings expectations.