Dow Briefly Surpasses 12,000

The Dow Jones industrial average briefly swept past 12,000 for the first time Wednesday, extending its march into record territory as investors grow increasingly optimistic about corporate earnings and the economy. The blue-chip average rose to a new closing high but fell just short of the 12,000 mark.

The index of 30 big-name stocks surpassed the milestone just after trading began, rising as high as 12,049.51, before pulling back as the market’s initial wave of enthusiasm dissipated and investors cashed in some of their gains. The fact that the markets didn’t barrel higher shows some healthy caution, particularly given that many companies have yet to report third-quarter results.

It took the Dow 7 1/2 years to make the trip from 11,000, having been pummeled during that time by the dot-com bust, a recession and the aftermath of the 2001 terror attacks. That slow trek was a striking contrast to the Dow’s sprint from 10,000 to 11,000 in just 24 trading days in the spring of 1999, during the heady days of the Internet boom.

The Dow, whose stocks include blue chips such as IBM, Microsoft and Wal-Mart Stores, has risen 312 points this month as oil prices retreated below $60 a barrel and it appeared that the economy was headed for a soft landing after more than two years of interest rate increases.

Wednesday’s closing record was the Dow’s eighth in little more than two weeks.

The Dow’s quick move past 12,000 on Wednesday came after a Labor Department report indicated that consumer price pressures were leveling off and third-quarter earnings reports from companies including IBM bolstered investors’ confidence.

The Dow closed up 42.66 points, or 0.4%, at 11,992.68. The previous closing high of 11,980.60 was set Monday.

Broader stock indicators were mixed. The Standard & Poor’s 500 index rose 1.91 points, or 0.1%, to 1,365.96, and the Nasdaq composite index fell 7.80 points, or 0.3%, to 2,337.15.

Crude oil futures settled down $1.28 to $57.65 a barrel on the New York Mercantile Exchange amid growing concern ahead of an OPEC meeting today; doubts have swirled over whether members of the Organization of the Petroleum Exporting Countries can agree on an immediate production cut.

Investors’ relief over oil’s decline from a high of $78.40 has given Wall Street an unusually strong October and powered the Dow higher. Some of the market’s worst days, including the 1929 and 1987 crashes, have been in October. And it was on Oct. 9, 2002, in the depths of the bear market, that the major indexes fell to their lowest levels in years -- the Dow closed that day at 7,286.27.

The Dow has recovered faster from the stock market’s troubles than the S&P; 500 and the Nasdaq have done. All three indexes peaked in early 2000 before dropping precipitously, but the S&P; 500 and Nasdaq suffered more because of the heavy representation of high-tech issues among their stocks.

The S&P; 500, the index used as a benchmark by most market professionals, is getting closer to its peak of 1,527.46. But the Nasdaq, with its vast number of tech stocks, remains well below its high of 5,048.62.

Some analysts downplayed the Dow’s achievement, noting that many smaller stocks had already recovered.

“Focusing on this one index is very shortsighted,” said Tom McManus, an investment strategist at Banc of America Securities. “What you’re seeing here is the mega-cap stocks playing catch-up to the rest of the market, and not even doing it robustly either. We’ve seen very impressive gains for the so-called broad market, but the Dow just isn’t as relevant any longer.”

The drop in the September consumer price index, the key measure of inflation, was aided by a decline in energy costs. The closely followed core inflation figure, which excludes energy and food, rose a modest 0.2%, in line with expectations. The increase helped advance the notion that inflation might remain in check, giving the Federal Reserve room to continue to hold steady on interest rates.

In other economic data, the Commerce Department reported a stronger-than-expected increase in September housing starts. The figure rose 5.9%, rather than falling 1.2% as had been expected. Building permits, considered a less-reliable figure, fell 6.3%.

The housing and economic data sent a mixed signal to the bond market, leading to little change in U.S. Treasury yields. The yield on the benchmark 10-year T-note slipped to 4.76% from 4.77% on Tuesday.

In other market highlights:

* IBM rose $2.87 to $89.82 after the company reported a nearly 50% jump in its third-quarter profit, topping Wall Street’s forecast.

* Intel advanced 21 cents to $21.11. After the close of trading Tuesday, the world’s largest chip maker posted lower earnings and revenue, but the results were better than Wall Street had expected.