Dow closes above 13,000 for 1st time since 2008

Updated: 7:32 p.m. ET

The Dow Jones industrials($INDU) closed above 13,000 today for the first time since May 2008 as the stock market continued its  huge rally since last October.

At the same time, the Standard & Poor's 500 Index ($INX) finished at its highest level since June 2008.

The market's surge reflects optimism that the worst of the Great Recession of 2008-09 may be over. The jobs picture has been improving, along with manufacturing, and there are some signs that the U.S. housing market is stabilizing. Consumer confidence jumped in February, The Conference Board said today, largely because of hopes for an improving jobs market.
 
Apple (AAPL) closed at a new all-time high of $535.41 on reports it will introduce its new iPad 3 next week. Its market capitalization was at $499.20 billion, some $88 billion more than ExxonMobil (XOM). The news also boosted chip stocks tied to Apple.

The economic data today were contradictory. The Richmond Federal Reserve Bank's monthly manufacturing index showed a nice gain. But the S&P/Case Shiller Home Price Index finished at its lowest level in December since the housing market peaked in 2006. Prices in Las Vegas ended the year at levels last seen in late 1999.

The Dow closed up 24 points to 13,005 after bouncing up and down all day. It was the best close for the blue chips since May 19, 2008. The S&P 500 closed up 5 points to 1,372, its best close since June 5, 2008. The index briefly topped 1,373, its highest intraday level since June 6, 2008. The Nasdaq Composite Index ($COMPX) added 21 points to 2,987, its best close since Dec. 13, 2000.

Article continues below. The market struggled with some choppiness during the day. But for-profit college operator Apollo Group (APOL) shares were down $8.36 to $43.04 after warning that enrollments and earnings would be lower than expected.

The Dow has been struggling to close above 13,000 since Feb. 17. It had pushed above 13,000 for six straight sessions but fell back each time at the close. That's probably a function of computers set to lock in daily profits for hedge funds as well as wariness about the health of the domestic and global economies.

Plus, there's history that 1,000-point levels tend to act as resistance points.

The same forces holding the Dow back from 13,000 had been weighing on the S&P 500.

But with a day to go in the month, the Dow and S&P 500 are still looking at their best February performances since 1998, with the Nasdaq looking at its best February since 2000.

The Dow's start to 2012 is its best since 1998; the S&P 500's is its best since 1991. The Nasdaq's 2012 beginning is its best in 12 years.

While there's great excitement about the market's gains, here's a little perspective. The Dow is still 8.2% below its all-time closing high of 14,164.53, set on Oct. 9, 2007. The S&P 500 is 12.3% below its 2007 peak close of 1,565.15.

The Nasdaq has recovered from its losses after the 2008 crash and is now 4.5% above its October 2007 peak. But it is still 41% below its all-time closing high, reached in March 2000.

Dow is up 25% since October
The Dow is up 25% from an intraday low on Oct. 3. The S&P 500 is up 27.7%, with the Nasdaq up 29.9%.

A late-day surge brought the Dow and S&P to new levels.

Stocks dropped at the open, just like Monday, with the Dow falling as many as 29 points, mostly because a report on durable-goods orders was the weakest in three years. The market turned higher, thanks to a Conference Board report showing markedly improved consumer confidence. The Dow reached as high as 13,019 before pulling back to around 13,000.

The final push started at 2:25 p.m. ET when the Dow had lost nearly all of its gains from the late morning and early afternoon.

If there was a worry for investors today, it was that the Dow Jones Transportation Average ($DJT) ended the day down 6 points to 5,165. So-called Dow theorists believe the market is headed higher if a new high in the Dow is accompanied by a new high in the transports. There's a reason for looking at the two indexes together: The Dow transports are a leading indicator for the market.

The Dow is up 6.5% so far in 2012; the transportation index is up 2.9%.  Moreover, the transports are down 8.1% from a high reached on July 7.

Tomorrow may well be a key day for the market, based on what the transports do. A bad for the group could suggest the market is near a top. Futures trading suggests a flat open.

Federal Reserve Chairman Ben Bernanke testifies on the economy and inflation before the House Financial Services Committee. The Fed releases its Beige Book report, a narrative look at the economy compiled for its March 13 meeting.

The Chicago Purchasing Managers Index, widely watched by Wall Street, will be released by the Institute for Supply Management-Chicago.

Earnings are due from Costco Wholesale (COST), construction equipment manufacturer Joy Global (JOY), supermarket operator Kroger (KR) and Martha Stewart Living Omnimedia (MSO).

Crude oil slips, but gold and silver rally
Crude oil (-CL) settled down $2.01 to $106.55 a barrel today, its second straight decline. Brent crude was down $1.27 to $122.90 a barrel. The declines were related to the decline in the Commerce Department's durable-goods report, which suggests the economy isn't quite as strong as hoped.

Also, while Syria is convulsed with violence, tensions over Iran appear to have eased.

Gold (-GC), meanwhile, settled up $13.50 to $1,788.40 an ounce as the dollar moved lower against euro and the British pound. Silver (-SI) was up $1.616 to $37.14 an ounce and is up 32.8% this year. Copper (-HG) rose 3.2 cents to $3.912 a pound.

Interest rates were flat, with the 10-year Treasury yield moving up slightly to 1.929% from 1.922% on Monday.

Energy prices -- New York close
			Tues.			Mon.			Month chg.			YTD chg.
Crude oil (-CL)			$106.55			$108.56			8.19%			7.81%
(per barrel)
Heating oil (-HO)			$3.2201			$3.2829			5.14%			10.50%
(per gallon)
Natural gas (-NG)			$2.5190			$2.6030			0.64%			-15.72%
(per mil. BTU)
Unleaded gasoline (-RB)			$3.2247			$3.3027			11.55%			21.35%
(per gallon)
Brent crude			$121.55			$124.17			9.52%			13.20%
(per barrel)
Retail gasoline			$3.7160			$3.6980			7.93%			13.43%
(per gallon; AAA)

A nice jump in confidence; a home-price decline

The Conference Board's consumer confidence index shattered expectations, rising to a reading of 70.8 in February from 61.5 in January. Economists expected an index reading of 63.

The gain was a surprise, given rising gasoline prices. But, IHS Global Insight economist Chris Chrisopher noted, "Americans feel that job prospects are improving, despite the recent rise in gasoline prices. Consumers feel more optimistic across the board, and there is hard evidence that the future is looking significantly better."

The government reported a 4% decline in durable-goods orders, a disappointment. The decline may have more to do with expiration of tax breaks for new orders.

But it also suggests that gains in goods orders will be modest, Paul Ashworth, chief U.S. economist with Capital Economics, wrote clients today.

 

But Ian Shepherdson, chief U.S. economist at High Frequency Economics, was less worried. "We see no evidence of underlying slowing in the industrial economy, so we look for a rebound in February and the re-emergence of the upward trend over the next couple of months."

And Paul Edelstein of IHS Global Insight suggested the decline had more to do with aircraft orders than anything else. The volatility is "obscuring the underlying picture, which is that business capital equipment demand continues to trend higher," he wrote today.

The S&P/Case Shiller 20-city home-price index fell 4% in December from a year ago, exceeding economists' estimates of a 3.6% drop. 

 

Detroit showed the only year-over-year price increase -- 0.5% -- of 20 markets tracked by the index. Atlanta was the weakest metro area, with prices off 12.8% from a year ago.

"While we thought we saw some signs of stabilization in the middle of 2011," S&P's David Blitzer said, "it appears that neither the economy nor consumer confidence was strong enough to move the market in a positive direction as the year ended."

Priceline leads the S&P 500; Microsoft tops the Dow

The market was led by gains in technology stocks. The laggards were utility stocks, which would pull back if growth takes over the market.

Online travel booker Priceline.com (PCLN) was the top S&P 500 performer, up $41.22 to $632.76. Late Monday, the company posted fourth-quarter earnings  well above Wall Street's expectations. Priceline reported $276.8 million, or $5.37 a share, after one-time charges, on revenue of $991 million for the three months ended Dec. 31. Analysts had expected earnings of $5.05 a share on revenue of $967.9 million.

For its fiscal first quarter ending in March, Priceline said it expects earnings $3.80 to $3.90 a share with revenue up 22% and 27% from a year earlier. Analysts have been looking for earnings of $3.72 a share.

Microsoft (MSFT) was the top Dow performer, up 48 cents to $31.87, its best close since January 2008. The stock hit a 52-week high of $31.93. Twenty-one of the 30 Dow stocks were higher. (Microsoft publishes MSN Money.)

Johnson & Johnson (JNJ) and Procter & Gamble (PG) contributed nearly 11 points to the Dow's gain. The laggard was American Express (AXP), down 42 cents to $53.76.

Seventy-two stocks in the Nasdaq-100 Index ($NDX) were higher, led by Priceline.com. Apollo Group was the laggard -- and was the laggard among S&P 500 stocks. The Nasdaq-100 was up 27 points to 2,633.

About 300 S&P 500 stocks were higher. Micron Technology (MU) was second after Priceline. Investors think its prospects have improved following the bankruptcy of Elpida Memory, the last Japanese maker of computer memory chips.

Short hits from the markets -- New York close
			Tues.			Mon.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.1000%			0.100%			0.00%			900.00%
5-year Treasury note			0.835%			0.845%			0.00%			0.60%
10-year Treasury note			1.929%			1.922%			7.23%			3.10%
30-year Treasury bond			3.059%			3.042%			4.26%			5.88%
Currencies
U.S. Dollar Index			78.3			78.578			-1.41%			-2.76%
British pound			1.5903			1.5827			0.73%			2.35%
(in U.S. $)
U.S. $ in pounds			£0.629			£0.632			-0.73%			-2.30%
Euro in dollars			$1.35			$1.34			2.51%			3.96%
(in U.S. $)
U.S. $ in euros			€ 0.742			€ 0.746			-2.44%			-3.81%
U.S. $ in yen			80.65			80.49			5.48%			4.60%
U.S. $ in Chinese			6.32			6.30			-0.11%			-0.08%
yuan
Canada dollar			$1.005			$0.999			0.40%			2.47%
(in U.S. $)
U.S. dollar			$0.996			$0.998			-0.45%			-2.41%
(in Canadian $)
Commodities
Gold (-GC)			$1,788.40			$1,774.90			2.91%			14.14%
(per troy ounce)
Copper (-HG)			$3.912			$3.881			3.22%			13.85%
(per pound)
Silver (-SI)			$37.1400			$35.5240			11.66%			33.05%
(per troy ounce)
Wheat (-ZW)			$6.6825			$6.5275			0.34%			2.37%
(per bushel)
Corn (-ZC)			$6.5725			$6.485			2.86%			1.66%
(per bushel)
Cotton			$0.9224			0.9067			-2.40%			0.61%
(per pound)
Coffee			$2.0625			2.046			-5.39%			-10.19%
(per pound)
Crude oil (-CL)			$106.55			$108.56			8.19%			7.81%
(per barrel)