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

The Dow gains 54 as the Bernanke rally continues, despite a downgrade of US debt and profit-taking. Crude oil briefly tops $100. Apple hits new highs. UnitedHealth, not Apple, will replace Kraft in the Dow.

By Charley Blaine Sep 14, 2012 12:52PM
Charley BlaineUpdated: 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%.
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).

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)










 
313Comments
Sep 14, 2012 1:17PM
avatar
QE3 - printing money - We have 7000 years of history that tells us what happens when a nation prints money. Inflation becomes so bad that nations, civilizations and peoples are destroyed. What the hell is the problem with the American people that they don't understand history??? Is our educational system that bad??? What we should be doing is trying Bernanke and the whole federal reserve board for treason and hang them!!!
Sep 14, 2012 1:25PM
avatar
As the dollar shrinks in value and commodity prices go up, the only controllable cost savings are from payroll headcount reduction.  So in order to preserve profits, employment will go down.  So there will bemore layoffs, prices are higher and a further hurt to the middle class and the so called 99%.  And Obama is supposed to be their savior, while he is actually making them worse off.  Obama defends the middle class like he defends our consulates in the Middle East.  I don't know who is more stupid, Bernanke for thinking QE3 will work or the people who vote for Obama.
Sep 14, 2012 1:13PM
avatar

hmmmm more phony rallies, gas prices STRATOSPHERIC, of course obama's buddies in the middle east the muslim brotherhood are killing Americans, libs on top of that, the obama regime incredulous that all this is happening since we're all "friends" down there since the messiah took over, so the middle east is burning, our economy is now drawing 40billion dollars a month for non sense that doesn't exist, the first stimuli didn't work, now we're tripling down on more of it and thru all that, obama manages to do an interview with the pimp with a limp douchbag, way to go liberal azzholes, you've managed to not only destroy America, but the middle east as well,

 

oh and tell me again how obama is ahead in the polls again, luv to laugh at that stuff!

Sep 14, 2012 1:18PM
avatar
Here we go, for every 10 cent a gallon increase in gasoline the consumer cuts back about 10 Billion in spending on other goods.  Old Bendover's ploy to get Obama re-elected so Old Ben won't be out of a job and prosecuted for insider trading is going to destroy the economy.  The commodities bubble is coming; the Fed caused The Tech Bubble, the housing crisis and the banking crisis through misguided and selfish policies.
Sep 14, 2012 1:22PM
avatar
Many people loudly warned of the mistakes and consequences of the housing bubble way before it blew in 2007, and were ignored and even ridiculed by Greenspan, Bernanke, and the others.  Now, warnings about the deficits and money printing that I see consistantly repeated day in and day out on this site and around the world are routinely dismissed in the same smug manner.  
Sep 14, 2012 1:18PM
avatar

Well Bernanke and the democrats have done it again. As soon as he gave the ok to give the taxpayers money to wall street then gas jumped up 15 cents a gal. and food has started to rise and I'll bet he is getting a big payoff from the oil companies and the speculators.

Wall streeters soak it up for you will answer to God for the hardships you are putting on the people while you enjoy your wealth!

Sep 14, 2012 1:20PM
avatar
After you take the gas, and autos out of the equation retail sales were up .1 %. Who will pay for QE3?  Why anybody who is working and who must pay for food out of there wages, those of you who recieve food stamps will not need to worry, only the working Americans.  Not saying that those who work don't qualify, because my family of 6, and on my income of 50K we qualify.
Sep 14, 2012 1:08PM
avatar
I love it when higher fuel costs boost retail sales.  No inflation though.  The dollar will be down 11%  this year but hey that's normal.
Sep 14, 2012 1:34PM
avatar
Bernanke and Obama are both quite intelligent, but they are also ignorant.  And when you combine their ignorance with their arrogance and narcissism, you end up with a deadly combination.
Sep 14, 2012 1:11PM
avatar
Oh and the fed will continue buying until it sees meaningful employment..... but lowering the dollar will hurt the average persons buying power and most likely hurt the economy and cause job loss...... So infinite Fed buying eh?
Sep 14, 2012 2:09PM
avatar
NOW IT IS TIME TO SELL IT OFF AND STAND ON THE SIDELINES. THIS WILL BE THE FALL AND WINTER OF DISCONTENT THOUGH OUT THE WORLD. I HAVE BEEN WARNING OF THIS. WHEN THE FED. HAS TO FEED THE ECONOMY ANOTHER $400.00 BILLION YOU KNOW ALL IS NOT WELL WITH THE ECONOMY. OIL PRICES WILL DRIVE THIS MARKET DOWN! BEWARE MY FRIENDS IT HAS ALREADY STARTED!
Sep 14, 2012 1:32PM
avatar
The ups of the early day will be gone by the end of the day, gas prices will jump way up, economy will slow down even more the reason for all of this is the Middle-East, just stop ALL foreign aid use it to pay -down our debt, bring all troops home to protect OUR borders.   
Sep 14, 2012 1:33PM
avatar

F---k the working American people who will have to pay up at the pump so they can get to work,Exxon and the other rag head countries need help from the fed and Obama's punks. I think this will be the one to put the US over the edge.

Sorry American Families and its Children, you can think me from the soup line.

Sep 14, 2012 2:09PM
avatar
With Obama we see nothing but a failing economy, and higher inflation.  He is destroying this Country with his failed policies.  It will get worse if he is re-elected!
Sep 14, 2012 3:45PM
avatar
thanks bernanke.  You will create more bubbles than the housing markets with your lastest decision.  When no one can afford food, gas or medical insurance, will you be happy??
Sep 14, 2012 1:38PM
avatar
Coming sometime in Oct. I am expecting another market crash.  If history repeats, one can only hope that I am wrong.  I would not expect this rally to last for much longer.  If anyone is up over 20% maybe it's time to take a little profit.  Better to be safe then sorry.

What I am saying is don't be greedy.  We have a good chance of getting our heads ripped off and tossed in the garbage like yesterdays newspaper.

Sep 14, 2012 2:20PM
avatar
Lets review, QE1 and QE2 didn't work so lets do QE3.  All QE3 has done in one day is devalue the dollar, start a creep up in food prices and send oil/gasoline skyrocketing.  Makes sense to me.  Also, did you notice that industrial production is down again?  What is Bernake and the Fed thinking?  How can QE3 possibly help our economy and job growth?  Let the markets and the economy correct themselves.  Everytime government intervenes they screw it up worse than it was.  I think it is time to vote for hope and change again, only lets elect somebody else this time.
Sep 14, 2012 1:31PM
avatar
"40 Billion a month" I think we just purchased the proverbial farm with that one.
Sep 14, 2012 1:59PM
avatar
Bernanke rally my ****!!!!!!!!!!!! Fire Obama!!!!
Sep 14, 2012 2:02PM
avatar
WTF. What a F ing Shame. Dam oil and F us consumers. Again the consumer bears the burden of the filthy greedy oil companies and stocks and wall street pirates.
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[BRIEFING.COM] The major averages punctuated a solid week with a subdued Friday session. The S&P 500 shed 0.2% to narrow its weekly gain to 1.7%, while the Nasdaq Composite (+0.1%) displayed relative strength. The tech-heavy index finished the week in line with the benchmark average.

Market participants went into today's session expecting to hear some new insight from Fed Chair Janet Yellen, who delivered the keynote address at this year's Jackson Hole Symposium. Unfortunately, the ... More


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