Dow Closes at Record High
NEW YORK (TheStreet) -- The Dow Jones Industrial Average closed at a record high on Tuesday, marking a new peak in a four-year rally that began in March 2009 at the depth of the financial crisis.
An uneven economic recovery notwithstanding, stocks have climbed from the bottom fueled by an ultra-easy monetary policy that has left few viable investment options outside equities.
In 2013, the Dow has gained 9%, on the back of a turnaround in housing and continuing improvement in corporate profitability and attractive valuations.
It was a read on the U.S. services sector Tuesday, which came in better than expected, that helped the Dow eclipse its previous 2007 peak."We made new highs and I think the rally is going to continue," said Peter Cardillo, chief market economist at Rockwell Global Capital. "The reason for that is low interest rates, which have been powerful ingredients for the market. From a technical standpoint, the market continues to strengthen on a daily basis despite negative news. We have signs of technical strength when the market doesn't fall apart even with negative news." The Dow Jones Industrial Average surged 125.95 points, or 0.89%, at 14,253.77, after breaking through its all-time closing high of 14,164.53 and all-time intraday high of 14,198.10 achieved in 2007. Breadth was overwhelmingly positive, with winners dominating losers 27 to two. Alcoa (AA) closed unchanged. Top gainers included Cisco (CSCO), United Technologies (UTX), Boeing (BA) and Hewlett-Packard (HPQ). Only Coca-Cola (KO) and Merck (MRK) shares finished in the red. The S&P 500 finished up 14.59 points, or 0.96%, at 1,539.79. The Nasdaq was higher by 42.1 points, or 1.32%, at 3,224.13. Every major sector in the broad market rose, led higher by technology, capital goods, conglomerates and consumer cyclicals. Apple (AAPL) shares surged 2.7% on rumors that the company may be releasing the next version of its iPhone sooner than anticipated. Volumes on the New York Stock Exchange totaled 3.59 billion shares, and 1.88 billion shares on the Nasdaq. Advancers outpaced decliners by a ratio of 2.8-to-1 on the Big Board and 2.4-to-1 on the Nasdaq. The ISM non-manufacturing index showed a rise to 56% in February from 55.2% in January, above the expected read of 55%. The report's employment index decreased 0.3 percentage points to 57.2%, though indicated employment growth for the seventh consecutive month. "Retail investors remained bullish in February following a seven-month trend, rotating out of higher performing stocks, choosing instead to buy stocks that have recently underperformed. " Steve Quirk, senior vice president of TD Ameritrade's Trader Group. He added that in February retail investors were buying into stocks that were at lows, such as Apple (AAPL), Facebook (FB), 3D Systems (DDD), Intel (INTC) and ConocoPhillips (COP), and selling stocks that were at highs. Among those were Netflix (NFLX), JPMorgan (JPM), General Electric (GE) and Bristol-Myers (BMY). "If you look at these behaviors, we can conclude that our retail investors are becoming quite savvy and have a good understanding of how to navigate these markets. They're nimble, and they know how to protect themselves, using options such as derivatives to mitigate risk." The FTSE 100 in London finished up 1.36% and the DAX in Germany settled up 2.32% as eurozone finance ministers agreed to a bailout for Cyprus by the end of March, though details of how to arrive at a rescue package had not yet been worked out. Hong Kong's Hang Seng index closed up by 0.1%, while the Nikkei Average in Japan rose 0.27% as China's outgoing premier Wen Jiabao told parliament that the country's growth target would remain at 7.5% for 2013. Gold for April delivery rose $2.50 to settle at $1,574.90 an ounce at the Comex division of the New York Mercantile Exchange, while April crude oil futures increased 70 cents to close at $90.82 a barrel. The benchmark 10-year Treasury was off 5/32, bringing the yield up to 1.899%. The dollar was down 0.09%, according to the U.S. dollar index. In corporate news, Citigroup (C) CEO Michael Corbat makes his first presentation Tuesday since taking over the bank in October. Shares rose 1.5% as Corbat said he wouldn't be afraid to restructure businesses. Vornado Realty Trust (VNO) was selling 10 million shares of J.C. Penney (JCP) in an unregistered secondary transaction, according to a person familiar with the sale, The Wall Street Journal reported. J.C. Penney shares shed 10.6%. Cree (CREE) shares climbed 14.4% after the lighting products company hiked its current-quarter revenue and net income outlook and announced a new line of light-emitting diode bulbs. Checkpoint Systems (CKP) posted fourth-quarter earnings of 9 cents a share on revenue of $200.2 million, below expectations of earnings of 17 cents a share on sales of $207.3 million. The company Tuesday said that so far it has reduced its headcount by 1,850 of the roughly 2,400 employees Checkpoint may eliminate as part of a global restructuring plan. Shares added 6%. VeriFone Systems (PAY) reported fiscal first-quarter earnings of 51 cents a share on revenue of $428.7 million. Analysts expected 49 cents a share on revenue of $431.5 million after the market close. Shares rose 2.7% during the regular session. Impax Laboratories ( IPXL) said regulators have brought up new concerns about manufacturing practices at the company's plant in Hayward, Calif. Shares plunged 26%. Qualcomm ( QCOM) shares tacked on 2% after its board approved a 40% increase in the company's quarterly cash dividend and a new $5 billion stock repurchase program. Santarus (SNTS) shares surged 11.2% after the biopharmaceutical company booked stronger-than-expected fourth-quarter earnings and revenue and re-affirmed its full-year guidance. Electronic Arts (EA) shares rose 1.7% after the video games publisher announced that "SimCity" is now available on PC at retail stores across North America. -- Written by Andrea Tse and Joe Deaux in New York >To contact the writer of this article, click here: Andrea Tse.
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