Dow jumps 126, closes at record high

The blue chips move above their October 2007 peaks, with the entire market participating. The Dow has more than doubled since its 2009 bottom.

By Charley Blaine Mar 5, 2013 12:03PM
Updated: 8:19 p.m. ET

Almost four years after its 2009 bottom, the Dow Jones Industrial Average ($INDU) pushed past both its 2007 closing high and its all-time intraday high on Tuesday.

The blue chips topped the old closing high of 14,164.53 right after Tuesday's open and then blasted through its all-time intraday high of 14,198.10. The Dow closed up 126 points at 14,254. The index hit a new intraday high of 14,286.37.

The rally's catalysts were strength in Asian and European markets after decent economic news from China. As important, a report on the growth in the U.S. non-manufacturing economy was better than expected.
The Standard & Poor's 500 Index ($INX) was up 15 points to 1,540, and the Nasdaq Composite Index ($COMPX) rose 42 points to 3,224.

Google (GOOG) hit a new intraday high of $840.15 before closing at $838.68. The shares are up more than 18% this year. Apple (AAPL) was up $11.12 to $431.17. The shares hit a 14-month low on Monday.

By Ryan Jeffrey Smith for MSN MoneyFutures trading suggests the U.S. market will open modestly higher. The big economic reports are the Federal Reserve's Beige Book, a narrative look at the economy over the last month or so, and the ADP National Employment Report. This is a look at private-sector job creation ahead of Friday's jobs report from the Labor Department.

Twenty-eight of the Dow stocks were higher on Tuesday, led by Cisco Systems (CSCO), American Express (AXP), United Technologies (UTX) and Boeing (BA). Bank of America (BAC), an institution that exists largely because the Federal Reserve and U.S. Treasury helped keep it afloat in the dark days of 2008 and 2009, was up 23 cents to $11.64.

IBM (IBM), United Technologies and 3M (MMM) contributed 33 points to the Dow's gain.

The day's laggards: Merck (MRK) and Coca-Cola (KO), both with small declines.

The Dow is up nearly 118% from its March 9, 2009, closing low of 6,547.05. The nadir came after the U.S. market overall crashed in the wake of the U.S. housing bust that destabilized the U.S. and global financial systems. The Dow fell 54% between October 2007 and March 2009.

The rally may provide enough momentum for the S&P 500 to surge through its own 2007 highs this week. The index was just 24 points below its closing peak of 1,565.15, also set on Oct. 9, 2007. The Nasdaq is still about 36% below its all-time high, set during the tech boom's height back in March 2000.

But the market may also be setting itself up for a 5%-to-10% correction, said Alec Young, global equity strategist at Standard & Poor's. He sees the vulnerabilities increasing when the S&P 500 moves past 1,565.

The Dow's rebound since 2009 has been keyed by huge gains in such stocks as American Express, up about 500%; Home Depot (HD), up 287%; Caterpillar (CAT), up 280%; and IBM, up 148%. 

Twenty-nine of the Dow's 30 current members are higher than they were in March 2009. The exception is Hewlett-Packard (HPQ), which is down 20% over that time, a victim of falling sales of personal computers in the past few years and extreme management turmoil.

The big market rally since 2009 reflects several factors:
  • The Federal Reserve's efforts to boost the economy since the 2008-2009 bust. The Fed has kept short-term interest rates at nearly 0% and has vowed to keep them low until U.S. unemployment falls below 6.5%. The unemployment rate was 7.9% in January, and the February jobs report is due on Friday.
  • A modest economic recovery in the U.S. and better results in Asia. Though still high, the U.S. unemployment rate has come down from a peak of around 10%.
  • Renewed vigor in key industries including autos, technology and banking. The housing industry is also finally showing signs of recovery from its deep slump.

The rally is not without its critics. "The market is trading on politics," says Patricia Edwards, chief investment officer at Trutina Financial, a Bellevue, Wash., money-management firm.

Many worry the Fed's efforts will lead to inflation or worse. And it doesn't reflect how austerity moves in Washington may derail the U.S. recovery.

But Edwards notes that the Fed isn't alone in keeping interest rates low. Central banks in Europe and Asia have been as active as the Fed in trying to stimulate their economies.

Until they all stop, the big rally since 2009 may continue to expand, despite how ugly it looks. "It's like a teenager with pretty severe acne," Edwards says.

More on Top Stocks

Mar 5, 2013 12:33PM

What do you call $85 Billion in government spending cuts?

A good start.

Now if we'd start making some adjustments to balance trade and stop printing money like there is no tomorrow maybe there is hope.


Mar 5, 2013 2:13PM
The wealthy are making record high money in the markets but believe people on Social Security should be taxed and not them. That's pathetic.
Mar 5, 2013 1:51PM
Mar 5, 2013 1:14PM

Nothing was learned from the crash of 2007.

Mar 5, 2013 3:07PM

how can the market be setting a new record when we have budget cuts rolling out? Explain? The market is a day-to-day scam by the government and coporate America.


Why does gas go up and down so much? Never saw it like this when I was a kid. Oh, we a refinery down, so the gas is .30 higher. Really? One refinery makes or breaks the world economy? We have a new oil found in the Dakota's and it does not help the price go down? Explain?


It's a B.S.!

Mar 5, 2013 2:30PM
Most people low income middle class this doesn't mean crap. We need more jobs and stop printing money and weaking the dollar. the stock moarket in no way mirrors the economy this is smoke and mirrors. This too my friend will not last...
Mar 5, 2013 1:03PM

The headline always reads “New high!’ but never “Low volume!” Another new high on pathetic volume -that’s the real story

Mar 5, 2013 2:11PM

Let them eat stock.


With record numbers of Americans still out of work, unemployed, and on some kind of public assistance the stock market decides its time to set a record. Don't any of these criminal shyster politicians and banksters have any shame?


Let them eat stock.


While America continues to bleed jobs, and American companies close their doors, while the criminal out-sourcing and insourcing continues the stock market decides its time to set a record. Don't any of these criminal shyster CNBC types have any shame? These tools must eat. They will say anything to keep the paycheck coming.


Let them eat stock.


While the FED continues to pump in $85-Billion dollars of taxpayer money into supporting a manipulated fiancial system each month, the stock market decides its time to set a record. Doesn't anybody in the FED or the government have any shame?


Let them eat stock.

Mar 5, 2013 12:55PM
Roll the dice and let it ride, or take your chips to the window and quit while you're ahead?  A casino would want you to stay and play awhile longer.   So would Wall Street and our politicians when it comes to the markets.  What does that tell you?
Mar 5, 2013 12:53PM

The stock market should be in record territory with all the stimulus money pumped into it for the last few years. Just wish some of that money would trickle down to main street U.S.A. WAIT trickle down I have heard that before, didn't work with cutting the taxes on the top wage earners to produce jobs(Rep plan). So now we are going to try to trickle down from the financial and investment sector and largest companies owned by the same wealthy individuals(Dem plan). Some one is getting rich, Getting the feeling both parties are working for themselves or some one other than the American people, and definitely not in the best interests of this country. Go ahead get sucked in, 17 days till ?    

Mar 5, 2013 2:49PM
Just evedence of increasing economic disparity. Increased profits in the face of decreased production and employment. Nice.
Mar 5, 2013 1:22PM
Who cares? And it will be down tomorrow. It's a game. 
Mar 5, 2013 3:13PM

What difference does it make?  The only people benefitting are the rich and the politicians.  We're constantly crying about the economy and the loss of the middle class, but then the highlight of the day is the rising of the DOW!!!!  I don't get any of that money.  My family doesn't get any of that money.  My friends don't get any of that money.   But if I were to watch tv, I'd see the rich and glamorous having fun, the talk about one cow being pregnant, and images of large homes and gardens and shopping mania!!!


I read this BS and just got more depressed about being poor that I originally was.

Mar 5, 2013 1:04PM
I'm getting out.  Lots of boomers that can't afford to leave this money on the table.
Mar 5, 2013 2:18PM
The 1% control 50% of the market and that should explain it all.  
Mar 5, 2013 2:46PM
All of this market growth is positively correlated with the PRINTING OF MONEY.... look it up yourself... we are headed into another economic downturn in 6-8 months.
Mar 5, 2013 2:06PM

Even at the level of the DOW being at record levels, it will take another 15-years for my 401k to get back to where it was before the crash.

Mar 5, 2013 12:43PM
if 6 trillion in U.S. debt was sold only here instead of over seas ,it never would have made a new high.
Mar 5, 2013 12:44PM
Just waiting for the other shoe to fall...The higher it goes, the deeper it will sink.  Those with the ability to do so will ride it up, and ride it down and make money.  People like me with 401K's need to get out before the correction, the inevitable correction once Stimulus has run it's course or ceases to have the desired effect.  I guess a long term look at this, pull out when you feel it is right, knowing you can always ride it up again is a good bet.
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