Dow hits best level since 2008

Updated: 7:18 p.m. ET

Stocks pushed higher today, although the Dow Jones industrials ($INDU) came up just short of closing at 13,000 or higher. The blue chips, however, finished at their highest level since May 2008.

The Standard & Poor's 500 Index ($INX) finished at its best level since April 2011. The Nasdaq Composite Index ($COMPX) finished just below its 12-year high of 2,960, set just last week.

The rally came after an early pullback, thanks in part to strength in IBM (IBM), Procter & Gamble (PG), Wal-Mart Stores (WMT) and Chevron (CVX). The Dow would have closed above 13,000 if it hadn't been for a steep drop in shares of Hewlett-Packard (HPQ).

The Dow closed up 46 points to 12,985. The S&P 500 added 6 points to 1,363 after falling to as low as 1,352 early in the session. The Nasdaq rose 24 points to 2,957. The Nasdaq-100 Index ($NDX), which tracks the largest Nasdaq stocks, rose 15 points to 2,595. Crude oil (-CL) settled above $107 a barrel and was trading above $108 in electronic markets.

Article continues below.After the close, shares of Salesforce.com (CRM), the vendor of online customer-management software, jumped more than 11% to $145.20 after earning 43 cents a share exclusing one-time charges in the fiscal-fourth quarter. That was 3 cents better than expected and up 39% from a year ago.

Revenue of $632 million, up 38% from a year ago and ahead of the Street estimate of $624.1 million. The company has added new tools that handle customer support and analyze social-media postings to attract new users and boost sales from existing buyers, analysts said.

Based on today's regular close of $131.77, up $3.70, the stock is up 28.9% this year.

American International Group (AIG) shares rose 8.3% to $30.39. The company reported a fourth-quarter profit fueled by a tax benefit and an increase in the value of a stake in Asian insurer AIA Group. Operating profit beat analysts’ estimates.

Crocs (CROX) shares fell 12.5% to $17,87 after hours. The plastic-clogs maker forecast first-quarter earnings of no more than 26 cents a share. Analysts had been expecting 30 cents. The shares had finished up 23 cents to $20.42 in regular trading.

Should the Dow's inability to top 13,000 cause worry?
It's hard to say where the market is headed next. What we can say is that futures trading suggests Friday's market will open nigher.

The Dow's inabilty to push above 13,000 may well be a worry. So is the S&P 500's inability to finish above 1,363.61, its 2011 closing high, set on April 29,  and its 2011 intraday high of 1,370, reached the following Monday.

Resistance levels are hard to breach, and there's concern that consumers will cut back spending to cope with rising gasoline prices. There are also fears that worsening economic conditions in Europe will spread to the United States.

One reason for the market's early fade was declines in shares of Caterpillar (CAT) and Apple (AAPL). But the rally reignited when the two stocks reversed, with Caterpillar closing up 39 cents to $116.20.

Apple was up $3.35 to $516.39 after CEO Tim Cook told shareholders that the company was trying to figure out what to do with some $97.6 billion in cash and short-term investments.

The hoard is larger than the market capitalization of Citigroup (C) and slightly smaller than the market cap of PepsiCo (PEP). And, Cook conceded at today's annual meeting, that much cash is "more than we need to run a company."

Some shareholders want Apple to declare a dividend -- suspended in 1995 before the late Steve Jobs returned to Apple -- or a big share buyback. There's also talk of a possible stock split.

"The board and management team are thinking about this very deeply," Cook said.

Jobless claims give the market a boost
One catalyst for the rally today: Initial jobless claims came in at a seasonally adjusted 351,000, the government reported today. That was the same as the level of a week ago and the 12th straight week where weekly claims were below 400,000. That suggests a slow, but steady, recovery.

Meanwhile, a report from the Federal Housing Finance Agency showed that its index of home prices rose 0.7% in December, beating estimates.

At the same time, Target (TGT) shares reversed an early decline and moved higher on the day. 

Are speculators pushing gasoline prices higher?
Crude oil continued to move higher in the United States and Europe as investors speculated Iranian tensions will get worse before they get better.

Despite what some pundits say, the run-up in gasoline prices in particular is driven by speculation in gasoline futures by hedge funds and big money managers.

Gasoline demand "is as low as it’s been since April 1997,' Tom Kloza, chief oil analyst for the Oil Price Information Service, told BusinessWeek magazine. "People are properly puzzled by the fact that we’re using less gas than we have in years, yet we’re paying more." OPIS collects the data for AAA's Daily Fuel Gauge Report.

More than $11 billion in speculative cash has poured into gasoline futures since the start of the year, Kloza told Business Week. Gasoline at the pump was at $3.612 a gallon today, up from Wednesday's $3.579, according to AAA. That's up 10.3% for the year and 13.1% from a year ago.

Crude in New York settled up $1.55 to $107.83 a barrel and reached as high as $108.24 in electronic trading this afternoon. Brent crude had added $1.17 to $124.07.

Energy shares were mostly higher. Transocean (RIG) was up $1.62 to $50.61 after a federal judge said the operator of the Deepwater Horizon drilling rig that exploded in 2010 in the Gulf of Mexico can’t yet be held liable for Clean Water Act violations. The issue has to be determined at trial.

Gold (-GC) settled up $15 to $1,786.30 an ounce, while silver (-SI) jumped $1.302 to $35.356 an ounce. Copper (-HG) finished up 2.75 cents to $3.806 a pound.

Interest rates were lower, with the 10-year Treasury field dropping to 1.984% from Wednesday's 2.005%. The dollar was lower against the euro.

Energy prices -- New York close
			Thur.			Wed.			Month chg.			YTD chg.
Crude oil (-CL)			$107.83			$106.28			9.49%			9.11%
(per barrel)
Heating oil (-HO)			$3.2900			$3.2650			7.42%			12.90%
(per gallon)
Natural gas (-NG)			$2.6210			$2.6430			4.71%			-12.31%
(per mil. BTU)
Unleaded gasoline (-RB)			$3.2880			$3.2630			13.74%			23.73%
(per gallon)
Brent crude			$123.62			$122.90			11.39%			15.12%
(per barrel)
Retail gasoline			$3.6120			$3.5790			4.91%			10.26%
(per gallon; AAA)

Hewlett-Packard is a big drag on the Dow
If Hewlett-Packard was merely flat today, the Dow would have closed at around 13,010.
But HP shares fell $1.89 to $27.05 after the company's fiscal-first-quarter​ results and second-quarter guidance missed Street estimates. CEO Meg Whitman told CNBC this morning that the company had underinvested in new technologies in the last few years and will need time to catch up.

But she also warned in Wednesday's conference call that the company will need to save before it can grow. That suggested the tech giant may be in for some streamlining to free up cash for investments.

Target finally cheers investors
Target closed up $1.53 to $54.50. The company reported fiscal-fourth-quarte​r earnings that exceeded some analysts’ estimates, helped by discount card initiatives and grocery sales.

Target reported a small profit decline using generally accepted accounting. But once a tax benefit and other charges are taken out, the company earned $1.43 a share. Wall Street was looking for $1.40 or so.

The company expects first-quarter earnings of 97 cents to $1.07 per share.  Target had said fourth-quarter sales rose 3.3% to $20.94 billion. Sales at stores open at least a year, or same-store sales, rose 2.2%, down from a 2.4% gain a year earlier.

• Top Stocks: The case for Target vs. Wal-Mart

Kohl's (KSS) shares were down $3.08 to $49.11. The company said fourth-quarter earnings were hurt by heavy discounting during the holiday shopping season. And its earnings projection for the 2012-13 fiscal year missed Street estimates. The company said it would trim new-store openings and renovations of existing stores.

Sears makes a bid to right the ship
Meanwhile, Sears Holdings (SHLD) shares closed up $9.72 to $61.80 after the company announced a $2.4 billion quarterly loss. The gain was the largest in percentage terms in the S&P 500 and the Nasdaq-100.  The company will spin off about 1,250 stores, cut jobs and reduce inventory to shore up its operations. The latest results were "unacceptable," the CEO said.

The company hopes to raise $1 billion in cash by spinning off its Hometown and hardware-store business via a rights offering. It is selling 11 store sites to General Growth Properties (GGP) and plans to trim its inventories by $580 million.

The latter tactic is tricky. If buyers sense you don't have anything to sell, they'll go elsewhere.

Sears has been struggling of late. In the fourth quarter it said it would close as many as 120 stores. Last week, 100 staffers at its headquarters were let go. CIT Group said it would no longer fund Sears's vendors amid uncertainties about the retailer's financial condition, although Sears is trying to reverse that decision.

• Top Stocks: Sears avoids oblivion -- for now

Leaders and laggards
You can't get a bigger winner today than Vivus (VVUS), whose shares jumped $8.18 to $18.73, the biggest winner among stocks in the Russell 2000 Index ($RUT). The drugmaker’s weight-loss pill Qnexa won the backing of a U.S. advisory panel as the company seeks to gain approval for the first new obesity drug in 13 years.
 
MetroPCS Communications (PCS) rose $1.42 to $11.70. The  pay-as-you-go wireless carrier reported fourth-quarter profit that beat analysts’ estimates. The percentage gain was second among S&P 500 stocks after Sears.

3D Systems (DDD) rallied $2.38 to $23.31. The maker of systems to create three-dimensional models reported fourth-quarter sales of $69.9 million, beating the average analyst estimate of $63.6 million in a Bloomberg survey.

Supermarket chain Safeway (SWY) declined $1.72 to $20.95.  The percentage decline was the biggest among S&P 500 stocks. The grocer’s fourth-quarter sales excluding fuel at stores open at least one year increased 1.5%, trailing the average 2% gain expected by analysts.

Short hits from the markets -- New York close
			Thur.			Wed.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.0900%			0.090%			0.00%			800.00%
5-year Treasury note			0.880%			0.860%			0.00%			6.02%
10-year Treasury note			1.984%			2.005%			10.28%			6.04%
30-year Treasury bond			3.124%			3.149%			6.48%			8.13%
Currencies
U.S. Dollar Index			78.886			79.303			-0.67%			-2.03%
British pound			1.5751			1.5674			-0.24%			1.37%
(in U.S. $)
U.S. $ in pounds			£0.635			£0.638			0.24%			-1.35%
Euro in dollars			$1.34			$1.33			1.81%			3.25%
(in U.S. $)
U.S. $ in euros			€ 0.748			€ 0.755			-1.77%			-3.15%
U.S. $ in yen			80.13			80.30			4.81%			3.93%
U.S. $ in Chinese			6.32			6.29			-0.13%			-0.09%
yuan
Canada dollar			$1.003			$1.000			0.19%			2.26%
(in U.S. $)
U.S. dollar			$0.998			$1.000			-0.25%			-2.21%
(in Canadian $)
Commodities
Gold (-GC)			$1,786.30			$1,771.30			2.79%			14.01%
(per troy ounce)
Copper (-HG)			$3.806			$3.834			0.42%			10.77%
(per pound)
Silver (-SI)			$35.5560			$34.2540			6.90%			27.37%
(per troy ounce)
Wheat (-ZW)			$6.4100			$6.4575			-3.75%			-1.80%
(per bushel)
Corn (-ZC)			$6.3950			$6.383			0.08%			-1.08%
(per bushel)
Cotton			$0.8923			0.9053			-5.59%			-2.67%
(per pound)
Coffee			$2.0205			2.0185			-7.32%			-12.02%
(per pound)
Crude oil (-CL)			$107.83			$106.28			9.49%			9.11%
(per barrel)