DJIA Reclaims 12000, Then Loses It
JONATHAN CHENG
The Dow Jones Industrial Average vaulted over 12000 for the first time in almost three years but couldn't hold that ground, closing just short of that milestone as investors digested President Obama's State of the Union address and the Federal Reserve's unanimous decision to stay the course on supporting the economy.
The Dow finished up 8.25 points, or 0.1%, at 11985.44, restrained by disappointing earnings from Boeing. Leading on the upside was DuPont, up $1.28, or 2.6%, to $50.32.
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The Nasdaq Composite Index rose 20.25 points, or 0.7%, to 2739.50, while the Standard & Poor's 500-stock index rose 5.45 points, or 0.4%, to 1296.63. The S&P 500 fell just short of the 1300 barrier, which it last held in August 2008, trading as high as 1299.74 in afternoon trading.
The traversing of 12000, while fleeting, was the latest reminder of the durability of the stock market's bull run on a day dominated by news from the government and the Fed, whose massive interventions helped propel markets to the current levels.
Still, the bull market's reliance on the Fed has some investors questioning the durability of the rally, given continued economic weakness.
Traders work on the floor of the New York Stock Exchange Jan. 26.
"After the housing bubble that burst in 2007-08, I think we'll probably never see those levels again," said Peter Costa, a New York Stock Exchange floor trader with Empire Executions. "Nine to 10% of our people are just trying to make ends meet, and I'm not sure you can get that sort of a run-up when so many people are just trying to get basic needs met."
In addition to the Fed decision and business-friendly words from President Obama in his State of the Union address, the market cheered data Wednesday morning showing new-home sales coming in much stronger than expected.
The Dow Jones Industrial Average vaulted over 12000 for the first time in almost three years but couldn't hold that ground, closing just short of that milestone. Kristina Peterson has details.
Leading the way were materials and energy stocks. AK Steel Holding rose 81 cents, or 5.2%, to 16.38, Cliffs Natural Resources climbed 5.97, or 7.3%, to 87.71 and U.S. Steel added 2.18, or 3.8%, to 59.48. Halliburton surged 3.20, or 8%, to 43.40 and Baker Hughes advanced 3.67, or 5.9%, to 65.99.
Among a slew of earnings announcements, aerospace giant Boeing posted an 8.2% profit decline as revenue and margins slid. Boeing offered a 2011 profit forecast well below consensus expectations, pushing shares down 2.22, or 3.1%, to 70.02, making it the steepest decliner among the Dow's 30 components.
United Technologies slipped 32 cents, or 0.4%, to 81.41 after the maker of Otis elevators and Pratt & Whitney plane engines reported a 12% rise in profit as sales climbed 6.3%, topping analysts' estimates. Revenue increased at five of the company's six segments.
Airline stocks were bolstered by hopes that carriers will be able to continue increasing airfares amid rising passenger demand. US Airways Group soared 67 cents, or 6.6%, to 10.80 after swinging to a fourth-quarter profit, despite significantly higher fuel prices amid a rebound in demand and cost controls.
United Continental Holdings jumped 1.70, or 7.1%, to 25.79 as revenue increased more than expected on rising traffic and capacity. Even so, the company—reporting combined results for the first time since October's merger between UAL Corp.'s United Airlines and Continental Airlines—reported a wider loss.
American Airlines parent AMR rose 18 cents, or 2.5%, to 7.39. Delta Air Lines added 35 cents, or 3%, to 11.98.
Xerox tumbled 87 cents, or 7.6%, to 10.53 after fourth-quarter earnings declined 5%, hurt by restructuring costs and a modest first-quarter earnings outlook.
SAP advanced 1.30, or 2.4%, to 56.46 in New York after Europe's largest software maker showed operational strength, despite taking a hit to cover the costs of its lawsuit with rival Oracle. The German company said it would raise its dividend for 2010 by 20%, and it expects sales and profit growth in 2011.
Yahoo fell 45 cents, or 2.8%, to 15.57 after the Internet search company late Tuesday gave a current-quarter revenue forecast that fell short of Wall Street's expectations.
Toyota Motor shed 1.57, or 1.9%, to 82.29 in New York after the auto maker said it was recalling more than 1.7 million vehicles world-wide to fix problems, including fuel-system defects.
The euro strengthened to $1.3691 from $1.3685 late Tuesday, the highest finish since mid-November. Oil rose $1.14, or 1.3%, to $87.33 a barrel to break a six-day losing streak. Gold edged up 70 cents, or 0.1%, to $1333 a troy ounce. Treasurys slumped broadly, pushing the yield on the benchmark 10-year note up to 3.430%.
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