Oil’s Fall Helps Dow Hit High

The Dow Jones industrial average rose to a record Tuesday, eclipsing its 2000 high, as a two-month decline in oil prices accelerated and improved the outlook for consumer spending.

But the Dow reached a new peak by itself; many broader market indexes hit records in May, while others -- including the Standard & Poor’s 500 and the Nasdaq composite -- remain well below their highs of the last bull market.

Stocks jumped after crude oil fell below $59 a barrel for the first time since February, on expectations of a continuing rise in supplies. Near-term crude futures in New York sank $2.35 to $58.68 a barrel in New York, the lowest close since Feb. 16. It was the biggest one-day decline since Aug. 17, 2005.

The latest slide in energy prices gave blue-chip stocks, in particular, a boost. Those issues have led the market in recent months, while smaller stocks have taken a back seat after dominating Wall Street’s leader board since 2000.

The 30-stock Dow climbed 56.99 points, or 0.5%, to 11,727.34, exceeding its old peak of 11,722.98 on Jan. 14, 2000.

In recent years, “You couldn’t give away these companies,” said Brett Gallagher, co-head of global equities at Julius Baer Investment Management in New York. “Now we’re in a reverse situation where these companies are getting more attention, and I think they deserve it.”

The Dow rose as high as 11,758 on Tuesday, faded a bit near the close, then rallied in the final minutes to assure a new high.

The S&P; 500 added 2.79 points, or 0.2%, to 1,334.11; it remains 12.6% below its 2000 high. The Nasdaq composite gained 6.05 points, or 0.3%, to 2,243.65. It is 56% below its 2000 peak.

Both the S&P; 500 and the Nasdaq have been held back by technology stocks, most of which remain far below their highs of the last bull market.

Winners topped losers by a narrow margin on the New York Stock Exchange on Tuesday, but losers had the edge on Nasdaq.

Some analysts have been troubled that the Dow has advanced in recent months while broader indexes, such as the NYSE composite, have failed to retake their spring highs.

Still, with the Federal Reserve on hold after tightening credit for two years, and with energy prices falling, many believe that stocks can continue to run.

Falling gold prices also are bullish, some experts say. On Tuesday, near-term gold futures plunged $21.40 to $576.30 an ounce.

“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, an analyst at Schaeffer’s Investment Research.

And that, in turn, could assure the Fed is done raising interest rates, analysts say.

Bond yields have tumbled in recent months, underpinning the rebound in stocks. The 10-year Treasury note yield was unchanged at 4.61% on Tuesday.

Since the last bear market ended Oct. 9, 2002, the Dow has risen 61%. The S&P; 500 is up 72% and the Nasdaq is up 101%.

Measured from the previous Dow peak in 2000, the biggest gainer in the index is food and tobacco giant Altria, which has soared 212%. Other big winners include Caterpillar, up 151%; United Technologies, up 103%; and Boeing, up 86%.

By contrast, Dow member Intel still is 60% below its Jan. 14, 2000, price. General Motors is down 59%, despite surging 72% this year. Microsoft is off 51% from the index’s 2000 peak.

The Dow is a price-weighted index, which means that moves in its highest-priced shares have the greatest effect on the index.

The computation of the Dow also makes it possible for the index to hit a record even though none of its member stocks themselves close at all-time highs. That was the case Tuesday: No individual Dow member ended at a record.

A number of Dow stocks have hit record highs in recent weeks, however. They include Altria, Boeing, United Technologies, Exxon Mobil and Procter & Gamble.

Among Tuesday’s market highlights:

* Falling oil prices buoyed retailers. Wal-Mart Stores, one of the Dow 30, jumped $1.02 to $49.46. Home Depot, also in the Dow, tacked on 49 cents to $36.83.

Kohl’s rose $2.04 to $67.53 after the department store company reported its largest monthly sales gain in almost four years as sales at stores open at least a year increased 16% in the five-week period through Sept. 30. Kohl’s also raised its third-quarter profit forecast.

* Boeing soared $1.81 to $81.78 after Airbus postponed deliveries of the super jumbo A380 jet for the third time in 16 months. Emirates airline, the largest customer for the jet, said it was reviewing “all options” on its 45-plane order.

* Oil’s retreat dragged energy shares lower. Of the 30 energy companies in the S&P; 500, 29 declined. The group lost 3.3%, the worst performance among the S&P; 500’s 10 industry measures. Merrill Lynch cut its recommendation on the group, citing falling oil prices and growing inventories.

Exxon Mobil slumped $1.59, to $65.41. ConocoPhillips slid $2.52 to $56.03 after saying production declined about 5% in the latest quarter as pipeline leaks disrupted output from the Prudhoe Bay field in Alaska.

* Quest Diagnostics plunged $10.90, or 18%, to $50 for the biggest drop in the S&P; 500. The No. 1 U.S. operator of medical-testing laboratories lost a contract with UnitedHealth Group that accounts for about 7% of annual revenue. Laboratory Corp. of America, which won the $3-billion contract over Quest, rose $1.36 to $66.57.

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Dow’s leaders and laggards

The Dow’s comeback has been powered by gains from a third of its members, led by Altria, the food and tobacco company whose brands include Kraft and Marlboro. Microsoft, Intel and General Motors, among others, have held the index back.

*--* Jan. 14, 2000 Tuesday Percentage change Stock close close since 1/14/00 YTD Altria $24.25 $75.64 +211.9% +1.2% Caterpillar 25.97 65.11 +150.7 +12.7 United 31.91 64.80 +103.1 +15.9 Technologies Boeing 44.00 81.78 +85.9 +16.4 Exxon Mobil 41.88 65.41 +56.2 +16.5 3M 49.66 74.03 +49.1 -4.5 Johnson & Johnson 46.84 65.50 +39.8 +9.0 Citigroup 40.46 50.09 +23.8 +3.2 American Express 46.54 55.99 +20.3 +8.8 Procter & Gamble 58.05 62.30 +7.3 +7.6 JPMorgan Chase 49.25 47.75 -3.0 +20.3 McDonald’s 42.61 39.68 -6.9 +17.7 Disney 33.56 31.00 -7.6 +29.3 American Intl. 76.04 66.69 -12.3 -2.3 Group* Hewlett-Packard 43.90 37.42 -14.8 +30.7 AT&T; 42.00 32.55 -22.5 +32.9 Pfizer* 37.00 28.41 -23.2 +21.8 Wal-Mart Stores 64.50 49.46 -23.3 +5.7 Coca-Cola 61.06 44.56 -27.0 +10.5 General Electric 50.33 35.71 -29.0 +1.9 Honeywell 59.88 41.90 -30.0 +12.5 International IBM 119.63 81.65 -31.7 -0.7 Alcoa 40.00 27.10 -32.3 -8.4 Verizon Comms.* 56.31 37.47 -33.5 +24.4 DuPont 67.39 42.96 -36.3 +1.1 Merck 70.16 41.99 -40.2 +32.0 Home Depot 61.94 36.83 -40.5 -9.0 Microsoft 56.13 27.37 -51.2 +4.7 General Motors 82.25 33.41 -59.4 +72.0 Intel 51.53 20.57 -60.1 -17.6 Dow average 11,722.98 11,727.34 +0.04 +9.4

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*Added to Dow since 2000

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Source: Bloomberg News

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Where key indexes stand

The Dow beat two broader indexes, the Standard & Poor’s 500 and the Nasdaq composite, back to record territory. But many other market indexes already have recouped 2000-2002 losses.

*--* 2000 Record high since Tues. Index peak 2000, and date close NYSE composite 7,164.55 8,646.96, 5/9/06 8,447.83 Dow industrials 11,722.98 11,727.34, Tuesday 11,727.34 Nasdaq composite 5,048.62 still below 2000 peak 2,243.65 S&P; 500 1,527.46 still below 2000 peak 1,334.11 S&P; small stocks 225.12 404.89, 5/8/06 367.99 S&P; mid-size stocks 548.60 817.95, 5/8/06 748.13 Dow transports 2,980.50 4,998.95, 5/9/06 4,469.46 Dow utilities 416.11 442.55, 8/31/06 431.29

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Source: Times research