Dow ends above 14,000 for first time since 2007
by Christina Rexrode, AP Business Writer
February 02, 2013 12:00 AM | 1661 views | 6 6 comments | 5 5 recommendations | email to a friend | print
NEW YORK — The Dow closed above 14,000 on Friday for the first time in more than five years.

It was just a number on a board, but it was enough to raise the hopes of some investors and cause others concern about an overheated market. And it brought reminders of a different era, back before the financial crisis rocked the world economy.

The Dow Jones industrial average, a stock market index that is traditionally considered a benchmark for how the entire market is faring, had been rising fairly steadily for about a month. On Friday, strong auto sales and optimism about U.S. job growth pushed it over the mark. The Dow is now just 155 points away from its record close.

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

But market watchers were divided over what the Dow milestone — or even what a potential new all-time high — really means. To some, it’s an important booster to hearts and minds, making investors feel optimistic and thus more willing to bet on the market.

“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.”

And those investors, until recently, had been shying away from stocks. Since April 2011, investors have pulled more cash out of U.S. stock mutual funds than they’ve put in, according to the Investment Company Institute. In the past three weeks, though, that trend has reversed, which could make January the first month in nearly two years where stock-focused funds had a net inflow.

To others, though, Dow 14,000 is nothing but a number, a sign more of how traders feel than of the economy. And it’s not even the best number on the board, some traders say. Professional investors usually pay more heed to the Standard & Poor’s main index, which tracks 500 companies compared to the Dow’s 30. The Dow garners attention, they say, because it’s more familiar to the general public.

Joe Gordon, managing partner at Gordon Asset Management in North Carolina, wasn’t celebrating Friday. He thinks the gains won’t last. The fact that small investors are finally piling back in the stock market, he said, is not a reason for optimism but a sign that it’s getting overhyped and due to fall.

After the Dow hit its all-time record in 2007, it fell almost steadily for the next year and a half. It lost more than half its value before starting to tick back up again.

“It is good trivia to talk about on television and the radio,” Gordon said, referring to the 14,000 mark. “It’s meaningless to the average professional.” And for workers still unemployed by the financial crisis, he said, “it really means nothing to them.”

If there is dissent over what Dow 14,000 signifies, what’s undeniable is that it’s a rarefied event. Before Friday, the Dow had closed above 14,000 just nine times in its history. The first time was in July 2007; the rest were in October of that year.

The last time the Dow closed that mark was Oct. 12, 2007, when it settled at 14,093.08. It had reached its all-time record, 14,164.53, three days before that.

For the average investor, that was all back when the stock market still seemed like a party. Housing prices were starting to ebb but hadn’t cratered. Jobs were abundant, with unemployment at 4.7 percent — compared to 7.9 percent now. Lehman Brothers still existed. So did Bear Stearns, Wachovia and Washington Mutual.

The Dow ended Friday 149.21 points higher to 14,009.79. The other indexes were also up. The S&P 500 rose 15.06 to 1,513.17. The Nasdaq composite index was up 36.97 to 3,179.10.

Auto sales helped. Toyota, Ford, GM and Chrysler all reported double-digit gains for January.

The government jobs report that pushed stocks forward was mixed, but traders chose to focus on the positive. The U.S. said it added 157,000 jobs in January, which was in line with expectations. Unemployment inched up to 7.9 percent from 7.8 percent in December. Many economists, though, were encouraged because the government now says that hiring over the past year was higher than originally thought.

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

Among stocks making big moves:

* Drugmaker Merck fell more than 3 percent, down $1.42 to $41.83. Its fourth-quarter profit suffered because of competition from generic medicines against its blockbuster allergy drug Singulair.

* Insurance company MetLife rose more than 2 percent, up 86 cents to $38.20, after saying it plans to buy the largest private pension fund administrator in Chile.

* Zoetis, an animal health business that Pfizer just spun off, made its debut on the stock market. It shot up 19 percent, rising $5.01 to $31.01.
Comments-icon Post a Comment
February 02, 2013
Good. So you're saying Obama finally owns the economy.

Then Obama will also take credit for the millions who are STILL unemployed and the 4th quarter contraction of the GDP.
Lib in Cobb
February 03, 2013
@Cobb Guy: Obama has turned around specific sectors of the economy. There is still a lot to do. You fail to give credit where credit is due. You will recall the the economy was in a power dive under George and his admin. Is the economy fixed and stable? No, but is is better now than in 2008. You will also recall that your guy left office in January 2009 with an approval rating nearly as low as Nixon. You will also recall that the GOP has alienated millions of voters in the US and they have embarked on a re-branding process, because they have badly misunderstood the American electorate. But, you hang in their with your inadequate party who feels that it's just fine to keep honest Americans from voting and to attempt changes involving how the votes are to be counted in future elections. If the GOP can't honestly win on a level playing field, well, just change the playing field. RIGHT? NO, WRONG!
Lib in Cobb
February 01, 2013
We can all thank President Obama. I just know most of the residents of Cobb agree with me.
Betsey Ross
February 02, 2013
You are a one man propaganda Machine, Lib in Cobb. Don't you have a job? Perhaps you're on SSI, Food Stamps, own an Obamaphone, get assistance with your gas bill and have a reduced cost mortgage, courtesy of Obama's failed (or greatly overhyped) Making Homes Affordable program. Or perhaps you were a recipient of the Solyndra Living Life for Free scholarship, paid for by the hard working lower middle class whose paychecks just saw a reducation of over $100 per month in most cases???? Do us all a favor and use your time to research the facts rather than parrot the prop. And get back to us when you're ready to get working and pay all us hard workers back the money you stole from us. You seem able bodied, if not able minded, so get to work! Since Obama has created SO many good jobs....
oh lawd.
February 03, 2013
Betsey Ross...

Gurl, I know Obama winning still burns, but don't YOU have a job. You need to look in mirror and realize it was you and people like you that lost this election. WING NUTS!

You lost your compassion somewhere, and you lost your brain too.

I'll pray for you gurl!
Lib in Cobb
February 03, 2013
@Betsey: No, I am gainfully employed as I have been for many years.

Since you and the other Tin Foil Hat wearing crowd have blamed our president for every aspect in the economic downturn, we should give him credit for the growth in the stock market since January 2009. The stock market has doubled in value in four years.

No one received a phone for voting for the correct candidate. This is another urban legend such as the birth certificate nonsense, but because your depth can be compared to that of a saucer, you believe it. YUP! Guess what, your inadequate candidates in the last two presidential elections lost. In 2008, an angry old man with tired old ideas lost to a man named Barack Hussein Obama. In 2012 a second inadequate GOP candidate lost to Barack Hussein Obama. Sounds like a mandate to me. I suggest you look up "mandate" since you most likely are unfamiliar with the meaning.

The Republicans are not the only sector of the population who work hard and pay their way. It is your belief that all Democrats are living off of grants and welfare. This type of thought process tells us a great deal about your intellect.

You come off as a very angry woman, I will guess that you are single.

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