Dow ends above 11,000 for first time in 18 months
NEW YORK (AP) – The Dow Jones industrial average closed above 11,000 for the first time in a year and a half on investors’ rising hopes about the economy.
The Dow edged up about 9 points Monday to almost 11,006. The Standard & Poor’s 500 index came within a point of hitting its own milestone of 1,200 during trading but closed just short of that mark.
Analysts said the Dow’s move above 11,000 could provide a psychological boost and perhaps draw more investors to the market.
“There is a huge stockpile of cash on the sidelines earning virtually nothing,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. “Maybe this can help shake a few people into the market.”
Stocks have been rising this year on growing expectations that the economy will shake off job market weakness and housing problems. A test of whether the Dow can hold the 11,000 mark will come in the next three weeks when companies report earnings. Investors also will want to see whether the government’s next employment report, due in early May, shows that employers added jobs in April as they did during March.
On Monday, a loan agreement for Greece allowed U.S. investors to focus on domestic economic and corporate news, including announcements of two big deals.
European Union leaders agreed over the weekend to make loans available to Greece to help the country lower its public debt burden. The 16 countries that use the euro agreed to provide $40.5 billion to Greece if needed. The International Monetary Fund could contribute another $13.5 billion.
Investors have been concerned that mounting debt in Greece and other European nations including Spain and Portugal would stunt a global recovery.
“This is clearly a positive development that the EU is identifying and dealing with what has really been it’s first real challenge,” said Alan Gayle, senior investment strategist for RidgeWorth Investments.
Meanwhile, the latest round of corporate dealmaking signaled that business leaders are more confident about a recovery.
Mirant Corp. agreed to acquire rival power company RRI Energy Inc. for $1.61 billion, while the private equity firm Cerberus Capital Management is buying DynCorp International, a provider of support services to U.S. national security operations, for $1 billion.
The reports on Greece and the corporate buyouts raised expectations that the economy is recovering. Hopes of a rebound have been driving the stock market higher for 13 months. The advance since February has been more incremental but the gains have still left major stock indexes at their best levels since 2008.
The Dow rose 8.62, or 0.1 percent, to 11,005.97. It was the Dow’s first close above 11,000 since Sept. 26, 2008. The index climbed above 11,000 in the final moments of trading Friday before fading below the threshold.
The Dow has posted six straight weekly advances, its longest winning streak in a year. The index has added 1,000 points in two months. The index’s only close below 10,000 this year came on Feb. 8. Since then, it’s up 11 percent.
It has risen 68.1 percent since hitting a 12-year low in March last year though it is still down 22.3 percent from its peak or 14,164.53 in October 2007.
In other trading, the S&P 500 index rose 2.11, or 0.2 percent, to 1,196.48. It traded has high as 1,199.20. It hasn’t topped 1,200 since September 2008.
The Nasdaq composite index rose 3.82, or 0.2 percent, to 2,457.87.
Bond prices rose, and the advance pushed down interest rates. The yield on the benchmark 10-year Treasury note fell to 3.85 percent from 3.88 percent late Friday.
Gold rose. Crude oil fell 58 cents to $84.34 per barrel on the New York Mercantile Exchange.
Alcoa Inc., the first of the Dow industrials to report first-quarter earnings, said late Monday it had a smaller loss than during the first three months of last year. But the aluminum company’s revenue fell short of expectations, and its stock fell 6 cents to $14.51 in after-hours activity. Alcoa was up 18 cents to $14.57 during regular trading.
Mirant rose $1.95, or 18.2 percent, to $12.68, while RRI rose 58 cents, or 14.7 percent, to $4.53. DynCorp surged $5.66, or 48.2 percent, to $17.41.
Three stocks rose for every two that fell on the New York Stock Exchange, where consolidated volume came to 4.6 billion shares, compared with 4.4 billion Friday.
The Russell 2000 index of smaller companies rose 2.11, or 0.3 percent, to 705.06.
Britain’s FTSE 100 rose 0.1 percent, Germany’s DAX index rose less than 0.1 percent, and France’s CAC-40 slipped less than 0.1 percent. Japan’s Nikkei stock average rose 0.4 percent.
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