Dow, S&P 500 finish at 5-year highs

Updated: 7:40 p.m. ET

Stocks took off at the open today and finished at fresh multiyear highs, despite seeing gains trimmed by a downgrade of U.S. debt and a big bout of profit-taking.

The Dow Jones industrials ($INDU) finished at levels last seen in December 2007. The blue chips had been up as many as 113 points at 10 a.m. ET but lost a bit more than half the gain after the downgrade to AA- from AA by Egan-Jones, a smaller credit-rating agency that tends to act before others. Another weight on stocks may have come when crude oil (-CL) in New York briefly topped $100 a barrel, due in part to Middle Eastern turmoil.

The rally was a quieter version of Thursday's big surge, set off by the Federal Reserve's decision to launch a new open-ended economic stimulus program. The Fed expects to buy $40 billion a month in mortgage-backed securities until it sees a meaningful improvement in the nation's job market. Bill Gross, the legendary bond-fund manager, suggested the Fed wants the unemployment rate to drop to 7% from the current 8.1%.

Apple (AAPL) hit a new intraday high of $696.98 on the momentum from the introduction of its new iPhone. The shares closed at $691.28, up $8.30, a record close. AT&T (T) and Verizon Communications (VZ) were lower after shares of both were downgraded -- because of the subsidies they will pay to Apple to get the newest iPhone. Home Depot (HD) closed up $1.16 to $59.46, a 12-year high, after announcing it was shutting down its last seven big-box stores in China but will retain an online presence and maintain some specialty stores.

The Dow closed up 54 points to 13,593, its best close since finishing at 13,727 on Dec. 10, 2007. The index had reached as high as 13,653. The Standard & Poor's 500 Index ($INX) gained 6 points to 1,466, its best close since Dec. 31, 2007. The index peaked at 1,475. The Nasdaq Composite Index ($COMPX) was up 28 points to 3,184, its highest close since Nov. 13, 2000. The gains for the major averages were their fourth in a row.

Article continues below. The Nasdaq-100 Index ($NDX), heavily influenced by Apple, was up 24 points to 2,855. The index had reached as high as 2,865. The Russell 2000 Index ($RUT.X) nearly hit a new intraday high before finishing at 864.60.

Even if the market pulled back from early highs, it has become quite vulnerable to a pullback, and that should surprise no one. Stocks have risen sharply since June. The Dow is up 12% since June 4, with the S&P 500 up 14.6% and the Nasdaq up 15.9%.

Plus, all three indexes look overbought. Their relative strength indexes are all above 70; a reading that high suggests a security or index is overbought.

The Dow was up 2.2% for the week, with the S&P 500 up 1.9% and the Nasdaq up 1.5%. For the year, the Dow is up 11.3%, with the S&P 500 up 16.6% and the Nasdaq up 22.2%.

• Check here to see the Dow's RSI

Markets for the week
			9/14/2012			9/7/2012			% chg.			YTD chg.
Dow Industrials			13,593.37			13,306.64			2.15%			11.26%
S&P 500			1,465.77			1,437.92			1.94%			16.55%
Nasdaq			3,183.95			3,136.42			1.52%			22.22%
Russell 2000			864.70			842.27			2.66%			16.71%
Crude oil			$99.00			$96.42			2.68%			0.17%
(per barrel)			0.00			0.00			0.00%			0.00%
U.S. Dollar Index			78.84			80.23			-1.74%			-2.09%
10-yr. Treasury			1.87%			1.66%			12.58%			-0.05%
Gold			$1,772.70			1,740.50			1.85%			13.14%

Crude oil and gold move up
Crude oil in New York was up 58 cents to $98.89 a barrel after reaching as high as $100.42. Crude hasn't closed above $100 since May 3. Brent crude, the North Sea benchmark oil, was up 78 cents to $116.66 a barrel.

The national average retail price of gasoline was $3.871, according to according to AAA's Daily Fuel Gauge Report, up from Thursday's $3.869 and up 16% this quarter.

Gold (-GC) settled up 60 cents to $1,772.70 an ounce and was up 1.9% for the week. Silver (-SI) slipped 12.2 cents to $34.66 an ounce. It gained 2.9% on the week. Copper added 12.25 cents to $3.8325 a pound. It rose 5.1% for the week -- and was a direct beneficiary of the Fed decision.

The 10-year Treasury yield, a big influence on mortgage rates, hit 1.878%, up from Thursday's 1.756%. The 30-year Treasury yield moved over 3% for the first time since May 11.

Energy prices -- New York close (updated)
			Fri.			Thur.			Month chg.			YTD chg.
Crude oil (-CL)			$99.00			$98.31			2.62%			0.17%
(per barrel)
Heating oil (-HO)			$3.2395			$3.2113			1.86%			11.16%
(per gallon)
Natural gas (-NG)			$2.9430			$3.0370			5.14%			-1.54%
(per mil. BTU)
Unleaded gasoline (-RB)			$3.0156			$2.9622			1.44%			13.48%
(per gallon)
Brent crude			$116.66			$115.88			1.82%			8.64%
(per barrel)
Retail gasoline			$3.8710			$3.8690			1.10%			18.16%
(per gallon; AAA)

Housing, metals and energy stocks lead the market
Housing, steel, copper and gold and energy stocks were the market leaders.

Ryland (RYL) was up $1.70 to $31.52. It hit a 52-week high of $31.55. Alcoa (AA) rose 21 cents to $9.84. Freeport-McMoRan Copper & Gold (FCX) was up 85 cents to $42.64. Newmont Mining (NEM) rose $1.75 to $57.20.

Caterpillar (CAT), up $2.49 to $93.17, was the top performer among the 30 Dow stocks.

UnitedHealth will join the Dow
UnitedHealth Group (UNH) will replace Kraft Foods (KFT) in the Dow Jones Industrial Average after the close on Sept. 21, S&P Dow Jones Indexes announced this morning. Kraft is spinning off its North American grocery business.

The change is the Dow's first since June 2009 when General Motors (GM) and Citigroup (C) were replaced by Cisco Systems (CSCO) and Travelers Companies (TRV).

UnitedHealth jumped to as high as $55.27 but fell back to $54.25, up 36 cents. Kraft was off 20 cents to $39.93.

There had been speculation that Apple might go into the Dow, but that would have required a huge stock split, possibly as big as 10-for-1. That's because the Dow is price-weighted. That means the higher the stock price, the more influence a stock has on the index.

IBM, the priciest Dow stock, was up 45 cents to $206.81.

Higher fuel prices boost retail sales
U.S. retail sales grew 0.9% in August, the most in six months, boosted by demand for autos and higher gasoline prices, as well as back-to-school sales. Economists had expected a 0.7%.

Industrial production fell 1.2% in August, its biggest monthly percentage drop in more than three years, in part because of Hurricane Isaac but also because of a big drop in auto production.

The University of Michigan-Thomson Reuters consumer-sentiment index rose to 79.2 in a first reading this month, the highest level since May. Economists had expected a decline to 73.5 from the final August reading of 74.3.

Next week: Housing starts, existing-home sales, Oracle and FedEx earnings
The economy will exert the most influence on markets next week.

The Empire Manufacturing Index from the New York Federal Reserve Bank on Monday and the Philadelphia Fed Index from the Philly Fed on Thursday will offer sketches of manufacturing health.

The Commerce Department will report on housing starts and building permits for August on Wednesday. The National Association of Realtors will weigh in with existing-home sales for August on Thursday.

Friday brings The Conference Board's index of leading economic indicators.

Watch to see how the energy markets react both to the Fed's stimulus move and to the Middle East turmoil.

The big earnings reports will be FedEx (FDX) on Tuesday and Oracle (ORCL) after Thursday's close. FedEx has already cut guidance because of weakness in Asian business.

Also reporting:

Wednesday: Adobe Systems (ADBE), General Mills (GIS), and office-furniture makers Steelcase (SCS) and Herman Miller (MLHR).

Thursday: Carmax (KMX), ConAgra Foods (CAG), RiteAid (RAD) and Tibco Software (TIBX).

• Check MSN Money's economic calendar.
• Check MSN Money's earnings calendar.

Short hits from the markets -- New York close
			Fri.			Thur.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.1000%			0.100%			11.11%			900.00%
5-year Treasury note			0.715%			0.654%			19.97%			-13.86%
10-year Treasury note			1.870%			1.756%			19.72%			-0.05%
30-year Treasury bond			3.088%			2.967%			15.05%			6.89%
Currencies
U.S. Dollar Index			78.841			79.237			-2.92%			-2.09%
British pound			1.6231			1.6158			2.16%			4.46%
(in U.S. $)
U.S. $ in pounds			£0.616			£0.619			-2.11%			-4.27%
Euro in dollars			$1.31			$1.30			4.36%			1.46%
(in U.S. $)
U.S. $ in euros			€ 0.761			€ 0.770			-4.18%			-1.44%
U.S. $ in yen			78.37			77.50			-0.16%			1.65%
U.S. $ in Chinese			6.34			6.33			-0.39%			0.20%
yuan
Canada dollar			$1.034			$1.033			1.90%			5.36%
(in U.S. $)
U.S. dollar			$0.968			$0.968			-1.87%			-5.08%
(in Canadian $)
Commodities
Gold (-GC)			$1,772.70			$1,772.10			5.04%			13.14%
(per troy ounce)
Copper (-HG)			$3.833			$3.710			10.86%			11.54%
(per pound)
Silver (-SI)			$34.6560			$34.7780			10.22%			24.15%
(per troy ounce)
Wheat (-ZW)			$9.2425			$9.0200			3.91%			41.59%
(per bushel)
Corn (-ZC)			$7.8200			$7.7375			-2.22%			20.96%
(per bushel)
Cotton			$0.7590			0.7353			-1.76%			-17.21%
(per pound)
Coffee			$1.8110			1.7885			9.92%			-21.14%
(per pound)
Crude oil (-CL)			$99.00			$98.31			2.62%			0.17%
(per barrel)