Dow closes above 13,000 for first time since crisis
Tuesday, February 28, 2012
The Dow Jones industrial average on Tuesday reclaimed the last of the ground it held before the carnage of the Great Recession — bailouts, bank failures, layoffs by the million and a stock market panic that cut retirement savings in half.
The Dow closed above 13,000 for the first time since May 19, 2008, almost four months before the fall of the Lehman Brothers investment bank triggered the worst of the financial crisis.
It just cleared the mark — 13,005.12, up 23.61 points for the day.
“I think it’s a momentous day for investor confidence,” said Jack Ablin, chief investment officer at Harris Private Bank. “What this number implies is that the financial crisis that we were all losing sleep over, it never happened, because now we’re back.”
The milestone comes at a time when Americans are feeling better about the economy than they have in a year. The Conference Board, a private research group, said its consumer confidence index was 70.8 for February, up from 61.5 in January.
The report came out at 10 a.m. and lifted the Dow above 13,000. It stayed there most of the day.
The breaking of the 13,000 barrier continues a remarkable run for stocks this year. The Dow started with its best January since 1997 and has added to that gain. The index is up 6.5 percent for the young year.
Other averages have fared even better: The Standard & Poor’s 500 is up 9 percent, the Russell 2000 index of smaller stocks is up 11 percent, and the Nasdaq composite index, dominated by technology stocks, is up 14 percent.
The other major indexes sit at multi-year highs as well. The S&P closed Tuesday at its highest level since June 2008, and the Nasdaq has not traded so high since December 2000, during the bursting of the bubble in technology stocks.
The S&P 500 gained 4.59 points for the day and closed at 1,372.18. Technical traders said it was a breakthrough because the S&P has been hemmed between 1,100 and 1,370 for months.
The Nasdaq gained 20.60 and closed at 2,986.76.
Just last August, the Dow dropped 2,000 points in three frightening weeks. Investors were worried about the European debt crisis, gridlock in Washington over the federal borrowing limit, a downgrade of the U.S. credit rating and the threat of another recession.
After Labor Day, the recession fears melted away. Since then, the stock market has been engaged in a tug-of-war between optimism over the improving American economy and fear that crisis in Europe would derail the U.S. recovery.
The optimists have been winning.
The Dow cruised to 13,000 the old-fashioned way, riding the economy higher. The unemployment rate has come down five months in a row, the first time that has happened since 1994.
The economy added 243,000 jobs in January, one of the three best months since 2006. Gains were surprisingly robust in industries across the economy, including the strongest hiring in manufacturing in a year.
In the stock market, the improving economy has translated to slow, steady gains — about 20 points a day for the Dow, averaged over the eight weeks. The index has gained more than 100 points on only three days, and it has not fallen 100 points on any day.