Dow rises 35 points but stops short of record again
The Dow Jones industrial average is within striking distance of a new record.
Still.
In what has become a near-daily ritual, the world’s best-known stock index inched closer to an all-time high Friday but stopped short once again.
The Dow climbed 35 points to rise for the second straight week. That marked a fresh five-year high and the third-best close of all time.
But whether it’s the budget stalemate in Washington or the typical jitters that precede such milestones, the blue chips couldn’t push into new high ground.
The Dow ended at 14,089.66 — just 75 points, or roughly 0.5%, from its peak close of 14,164.53 on Oct. 9, 2007.
Since climbing above 14,000 on Feb. 1, the index has largely meandered sideways, unable to muster the additional 165 points needed for the record.
Many experts think that will happen eventually, given the generally upbeat spirits among U.S. investors and consumers.
“The bottom line is stocks are headed higher,” said John Bollinger, head of Bollinger Capital Management in Manhattan Beach. “It’s going to be volatile and hard going. It won’t be easy money, but it will be money.”
The Standard & Poor’s 500 index is further away from a new high — about 3% — largely because of the continuing travails of Apple Inc. After a 2.5% drop to $430.47 on Friday, the technology behemoth has sunk 39% from its mid-September peak above $700.
Investors are encouraged that stocks have risen in the face of the budget showdown in Washington. The $85 billion in automatic spending cuts, known as sequestration, began taking effect Friday after federal lawmakers could not reach agreement on a plan to avert them.
The Dow might have achieved a new high already if not for the economic uncertainty brought about by the budget clash, said A.C. Moore, chief investment strategist for Dunvegan Associates Inc. in Santa Barbara.
“There’s an undercurrent of positive worldwide economic developments that continues to buoy stock prices,” Moore said.
Some experts think stocks have risen because of sequestration rather than in spite of it. Their logic is that investors cheer anything out of Washington, albeit unwieldy and scattershot, if it reduces budget deficits.
“Is it possible that the market actually likes the idea of sequestration?” Bollinger said. “It’s the only way it sees that any of this is going to get cut.”
Consumer confidence surged in February as the improving job market offset concerns about higher taxes and looming federal spending cuts.
The monthly consumer sentiment index from Thomson Reuters and the University of Michigan rose 5.1% last month from January. The new reading of 77.6 also was up 3.1% from a year earlier.
“Consumer confidence continued to improve in February due to expected gains in employment,” said Richard Curtin, the survey’s chief economist. “These expected job gains have partially offset concerns about higher payroll taxes and the impending reduction in federal spending.”
Although the unemployment rate ticked up to 7.9% in January, the economy added 157,000 jobs and figures for the last three months of 2012 were revised sharply upward. Weekly jobless claims have been trending down.
Meanwhile, consumers spent slightly more in January than in the previous month even as their income plummeted by the largest amount in 20 years because of the “fiscal cliff,” the Commerce Department said Friday.
People boosted their spending by saving less money as they sought to offset tax increases that took effect. The personal saving rate in January was 2.4%, down from 6.4% in December, the lowest monthly level since late 2007.
The U.S. economic data offset downbeat news from Europe, where joblessness hit a new high.
The Eurozone’s jobless rate went up in January to 11.9%, from 11.8% in December, as the region continued to grapple with recession and government cutbacks.
Staff writer Don Lee contributed to this report.
