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- Subjects of interest in 1992 killing take polygraph tests; results not revealed (1/18/17)2
- Governor cuts $146 million, colleges take hit (1/17/17)
Dow has first close above 12,000 in more than 2 years
NEW YORK -- The Dow Jones industrial average has closed above 12,000 for the first time in 2 1/2 years -- yet another sign the economy is extending its recovery from the recession.
Another big stock market index, the Standard & Poor's 500, reached a milestone of its own Tuesday. It closed above 1,300.
Investors found plenty of reasons to send stocks sharply higher. Earnings reports from companies including Pfizer Inc., United Parcel Service Inc. and Archer Daniels Midland Co. were better than expected.
And manufacturing, which has led the economic recovery, had another good month in January. The Institute for Supply Management said manufacturing activity expanded last month at its fastest pace in nearly seven years. Increased spending by businesses and consumers helped push the index higher, ISM said. And employment improved at the nation's factories.
"This is a good indicator that businesses have come out of the gate strongly in 2011," said Burt White, chief investment officer for LPL Financial. "We are seeing businesses spend again and this is exactly what we needed to see for this economy to move forward."
The better economic data helped push stocks broadly higher. All 10 company groups that make up the S&P 500 rose.
The Dow rose 148.23, or 1.3 percent, to 12,040.16. It last closed above 12,000 in June 2008, although it traded above that level several times last week before settling lower.
The S&P 500 gained 21.47, or 1.7 percent, to close at 1,307.59. It last closed above 1,300 in August 2008.
The Nasdaq composite index rose 51.11, or 1.9 percent, to 2,751.19.
Five stocks rose for every one that fell on the New York Stock Exchange, where consolidated volume came to 4.89 billion, up from Monday's 4.38 billion.
Pfizer said its fourth-quarter profit nearly quadrupled. The company narrowly beat analyst estimates and gained 5.5 percent. That was the best performance among the 30 stocks that make up the Dow.
Bond prices fell, sending their yields higher. The yield on the benchmark 10-year Treasury note rose to 3.43 from 3.38 percent late Monday.
The milestones for the Dow and S&P 500 are part of a remarkable run for stocks that began on March 9, 2009. The Dow stood at 6,547, its lowest point in 12 years. Since then, in the fastest climb since the Great Depression, it has risen 84 percent thanks to surging corporate profits, the unexpected resilience of personal spending and a bond-buying intervention by the Federal Reserve that made stocks more appealing. And some of the early gains came because investors realized that stocks had fallen too far during the financial crisis.
The Dow's total return, which assumes stock dividends were reinvested, is 92 percent. Anyone who bought an S&P 500 index fund that day in March 2009 has doubled his money, assuming dividends were reinvested.
The rebound could bring small investors back to the stock market. They have pulled nearly $245 billion out of U.S. stock mutual funds since June 2008, the last time the Dow was at 12,000, according to the Investment Company Institute. Earlier in the decade, they typically put in $145 billion a year.
And if Americans believe in the stock market again, it could accelerate the economic recovery.
"The lack of confidence has acted as a sedative across the economy," says David Kelly, chief market strategist at J.P. Morgan Funds. "The Dow at 12,000 could boost the psychology of the American investor and be a more powerful stimulant than anything else in driving the next stage of this bull market." Investors who see their stock portfolios rising will be more likely to spend money and take risks that could boost the economy, he says.