http://www.msnbc.msn.com/id/3683270/
Dow surges to new closing high
Passes record set in 2000 as oil prices continues to fall
The Associated Press
Updated: 5:40 p.m. CT Oct 3, 2006
NEW YORK - The Dow Jones industrial average finally reached new heights
Tuesday, extending Wall Street’s seven-year recovery with a record
closing level after climbing into uncharted territory in trading earlier
in the day.
The index of 30 blue chip stocks ended the session at 11,727.34, according
to preliminary calculations, wiping out the previous record of 11,722.98.
Earlier, the Dow crossed its old trading high of 1,750.28, rising up to
11,758.95. Both of the previous records were set Jan. 14, 2000.
While investors welcomed the Dow’s latest achievement, it comes at a
time the stock market is more conservative, even more muted, than the Wall
Street of early 2000. Then, investors were still piling exuberantly into
high-tech stocks. In 2006, the market’s gains come only after
investors’ careful parsing of economic data and corporate earnings
reports.
Tuesday’s advance came on the second straight day that oil prices fell
sharply, helping to calm fears about inflation and possible interest rate
increases. But the market as a whole has been choppy, with traditionally
defensive sectors such as pharmaceuticals and utilities leading the market
higher since its May and June decline, said Doug Johnston, head of U.S.
trading at Adams Harkness in Boston.
“I think we break out to the all-time high, then we could get a blow-off
correction off of that,” Johnston said.
The Dow, whose well-known large-cap stocks include aluminum producer Alcoa
Inc., discount retailer Wal-Mart Stores Inc. and the Walt Disney Co., has
recovered ahead of the broader Standard & Poor’s 500 and the Nasdaq
composite index, which also peaked in early 2000. Those indexes were
inflated — overinflated in the case of the Nasdaq — by the dot-com
bubble.
The S&P 500’s high close was 1,527.46, and the index remains more than
12 percent away from that milestone. The Nasdaq is even farther off its
highs and no one expects it to eclipse its record of 5,048.62 any time
soon.
To reach new highs, the Dow had to recover not only from the high-tech
collapse, but also recession and the effects of the Sept. 11, 2001, terror
attacks. The stock market was further shaken by corporate scandals at
companies including Enron Corp. and WorldCom Inc., and the Dow sank to a
five-year closing low of 7,286.27 on Oct. 9, 2002, nearly 38 percent off
its record high close.
The market’s recovery was helped by more than four years of solid
corporate profit growth, and more recently, the Federal Reserve’s
decision to halt its more than two-year string of interest rate hikes.
According to preliminary calculations, the Dow rose 56.99, or 0.49
percent, at 11,727.34. The Dow had briefly surpassed its closing high on
Thursday and Monday before retreating.
The broader stock indicators also closed higher. The S&P 500 index was up
2.79, or 0.21 percent, at 1,334.11, and the Nasdaq rose 6.05, or 0.27
percent, to 2,243.65.
Advancing issues led decliners by more than 8 to 7 on the New York Stock
Exchange, where volume came to 1.70 billion shares.
The decline in oil prices was the catalyst of the day. A barrel of light
crude settled at $58.68, down $2.35, on the New York Mercantile Exchange.
Oil prices have had a stunning fall from their intraday high for the year
of $78.40 a barrel, reached in July. Other commodity prices have dropped
as well, with gold descending from prices earlier this year that it
hadn’t seen for three decades.
“When oil and gold start to back off, that’s a sign that the economy
is slowing and inflation is not a fear,” said Joseph Sunderman, vice
president of research and development, Schaeffer’s Investment Research
in Cincinnati.
The entire energy sector was lower, with Exxon Mobil Corp. down $1.59 at
$65.41 and Chevron Corp. down $1.57 at $62.94.
Bonds fell, with the yield on the benchmark 10-year Treasury note rising
to 4.62 percent from 4.61 percent late Monday. The dollar was mixed
against other major currencies, while gold prices fell.
Marvell Technology Group Ltd. fell $2.29, or 12 percent, to $16.80 after
it said its third-quarter revenue would drop 10 percent from its
second-quarter revenue. Separately, the company also said it plans to
restate past financial results after a probe into its historical stock
option practices turned up discrepancies.
Quest Diagnostics Inc., which provides diagnostic testing services,
dropped $10.90, or 17.90 percent, to $50 after losing a nationwide
contract with health insurer UnitedHealthcare Inc. The existing agreement
expires at the end of the year.
Kohl’s Corp., said its sales at stores open at least a year, a closely
watched measure of retail performance, rose 16.3 percent in September. The
low-price chain, which also boosted its third-quarter profit forecast,
rose $2.04 to $67.53.
Fresh concerns about the upcoming release of Sony Corp.’s
much-anticipated PlayStation 3 video game console and reports of erratic
performance dragged Sony shares down 63 cents to $39.10.
The Russell 2000 index of smaller companies fell 0.46, or 0.06 percent, to
718.35.
Overseas, Japan’s Nikkei stock average closed down 0.08 percent.
Britain’s FTSE 100 dropped 0.35 percent, Germany’s DAX index slid 0.12
percent, and France’s CAC-40 fell 0.45 percent.
--
War is an ugly thing, but not the ugliest of things; the decayed and
degraded state of moral and patriotic feeling which thinks nothing worth a
war, is worse. A man who has nothing which he cares more about than he does
about his personal safety is a miserable creature who has no chance at
being free, unless made and kept so by the exertions of better men than
himself.
- John Stuart Mill
