Optimism Boosts Stocks
Reflecting rising optimism over the economy, the Dow Jones industrial average on Monday surpassed 11,000 for the first time since June 2001, amid a broad rally in stocks.
The average of 30 blue-chip stocks ended the day up 52.59 points, or 0.5%, to 11,011.90. The last time the Dow finished above 11,000 was June 7, 2001, when it closed at 11,090.74.
Monday’s advance followed a 241-point surge last week as investors grew increasingly optimistic that the Federal Reserve soon will end its string of interest rate hikes. Investment firms’ upgrades of Dow components General Motors and JPMorgan Chase helped carry the index past 11,000 on Monday.
“It sends a signal that the U.S. economy has weathered some pretty harsh storms over the past few years and in recent months,” said Art Hogan, investment strategist at Jefferies & Co.
Among other well-known indexes, the Standard & Poor’s 500 and Nasdaq composite also ended at multi-year highs.
The S&P; rose 4.70 points, or 0.4%, to 1,290.15, a 4 1/2 -year high; the Nasdaq added 13.07 points, or 0.6%, to 2,318.69, its best close since Feb. 20, 2001.
Some key indexes, including the New York Stock Exchange composite and the Russell 2,000, hit all-time highs, continuing their recent hot streaks.
But the market’s breadth was less impressive than last week, suggesting that the advance may be slowing. Winners topped losers by 2 to 1 on the NYSE.
In other trading, the yield on the 10-year U.S. Treasury note was unchanged at 4.37%. Gold futures soared $9.40 in New York trading, to $549.10 an ounce, a 25-year high.
Crude oil and natural gas futures retreated as mild winter weather pervaded the country. A barrel of light crude lost 71 cents to $63.50 a barrel in New York, where natural gas slid 27.2 cents to $9.360 per 1,000 cubic feet.
The Dow came within 16 points of 11,000 last March 7, but fell back amid worries about inflation and higher oil prices, concerns that dogged the market for much of 2005.
The index still is more than 6% below its all-time high of 11,722.98, reached Jan. 14, 2000, as the high-tech boom approached its peak, but it has recovered from its bear market low of 7,286.27, reached on Oct. 9, 2002.
Meanwhile, the S&P; 500 is 15% off its all-time high set on March 24, 2000, and Nasdaq is 54% below its record high on March 10, 2000.
The Dow fell 0.6% in 2005 while most other indexes were modestly higher. The market was held back for much of the year by concerns about the effects of record-high oil prices on inflation, consumer spending and corporate profits.
But investors’ mood changed radically last week with the release of minutes from the Fed’s last meeting, during which policymakers signaled that their streak of rate hikes dating back to mid-2004 could soon end.
In other market highlights:
* After the closing bell, Alcoa said its profit tumbled 16% because of lower production due to the hurricanes, strikes and restructuring moves. Alcoa -- the first of the largest U.S. companies to release quarterly results -- climbed 36 cents to $30.57 in the regular session, but lost about $1 in after-hours trading.
* Goldman Sachs analysts raised GM one notch to “in-line,” saying a bankruptcy filing at the world’s biggest automaker is “very unlikely anytime soon.” GM jumped $1.61 to $22.41.
* Shares of home builders increased after a Merrill Lynch analyst said housing demand would remain strong, in part because of immigrants and demand for second homes. D.R. Horton, the largest builder by market value, climbed $2.70 to $39.95. Pulte gained $2.46 to $44.08 and KB Home vaulted $4.15 to $79.89.
* JPMorgan gained 65 cents to $40.67 and Merrill Lynch added 98 cents to $69.68, both on optimistic outlooks from Prudential analyst Michael Mayo.
* Cisco Systems added 29 cents to $19.06 on an analyst’s upgrade. The computer networker’s stock is up 11% this year.
