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Dow: Second-best showing ever Blue chips end higher but a surge in oil prices causes Dow to give back some gains after peaking just short of its all-time record. Nasdaq and S&P end barely higher and well off their all-time records. NEW YORK (CNNMoney.com) -- Stocks inched higher Wednesday, giving the Dow Jones industrial average its second-highest close ever. However, the blue-chip barometer failed to take out the all-time record, due to surging oil prices, a weak read on durable goods orders and a mixed read on the housing market.
The 30-share Dow (up 19.85 to 11,689.24, Charts) added 0.2 percent, closing roughly 34 points short of its record closing high of 11,722.98, hit on Jan. 14, 2000. The record trading high is 11,750.28. The broader S&P 500 (up 0.25 to 1,336.59, Charts) index ended fractionally higher, ending at its best point since Feb. 2001. The Nasdaq composite (up 2.05 to 2,263.39, Charts) added a few points. A surprisingly strong consumer confidence report gave stocks a leg up Tuesday, putting the Dow about 53 points from its record close. After trying to take out the record throughout the session Wednesday, stocks hit some resistance in the form of a surprising run up in oil prices in the afternoon. While the Dow is near its record, the S&P 500 and Nasdaq are far from their closing highs - the S&P 13 percent away and the Nasdaq 55 percent. The Dow's high is a psychological barrier but not necessarily one that Wall Street professionals are much influenced by, said Tom Schrader, managing director of U.S. stock trading at Legg Mason. "The Dow is not really representative of the U.S. economy," Schrader added. "It's a benchmark, but the S&P 500 and the Nasdaq are broader." Run, slide, recovery The Dow record in January 2000 came near the tail end of the Internet boom of the late 1990s. The Nasdaq and the S&P 500 hit their record highs roughly two months later. But the broader market began to slide soon after. Within two weeks of hitting that January 2000 peak, the Dow had lost 8 percent. The Dow and the broader market recovered most of the losses in April and then in August of that year, before giving up and heading lower. The bursting of the Internet bubble, the recession that ended in 2001 and the events of 9/11 all contributed to a bear market that lasted for three years. After bottoming out in October 2002, stocks have slowly recovered. Last May, the S&P 500 hit a 5-1/2 year high and the Dow closed at its highest point since the record. But record high oil prices and worries about the economy caused investors to backtrack through the summer. Stocks have since recovered, thanks to hopes that falling oil prices and slow, but not too slow economic growth mean the nation is not heading for a recession, but a "soft landing." "We had a correction and the market bottomed on June 13," said Alec Young, equity strategist at Standard & Poor's. "A lot of negatives were priced in, but a lot of the things the market was worrying about turned out not to have been as bad as what was expected." Analysts seem to think that the market should be able to continue rising, at least in the short term. "I don't expect the market to encounter serious headwinds unless or until employment growth or profit growth slow," said Stuart Schweitzer, global markets strategist at JP Morgan Asset Management. "I think both are coming, but it may take a while for that to happen." Wednesday's market A surprisingly weak read on August durable goods orders Wednesday initially seemed to challenge the recent economic optimism, as it suggested that perhaps the economy is slowing more than expected. However, after a dip at the open Wednesday, stocks again moved higher. Investors also took in a report that showed new home sales rose in August from July's revised numbers. But the median price of a new home dipped from a year earlier, due to an oversupply of new homes, further signs of the slowdown hitting the housing market. Stock gains were selective, with commodity shares among the most upbeat. Silver shares boosted the iShares Silver Trust (up $2.33 to $116.22, Charts) by 2 percent, while a rally in gold stocks lifted the Amex Gold Bugs (up $5.67 to $305.67, Charts) index by 1.9 percent. Valero Energy (up $2.24 to $51.87, Charts) and Marathon Oil (up $2.34 to $76.32, Charts) were among the stocks boosting the Amex Oil (up 19.64 to 1,082.36, Charts) index by 1.9 percent. Dow component McDonald's (up $0.76 to $39.82, Charts) rose after the company lifted its quarterly dividend to $1 per share from 67 cents. General Motors (up $0.87 to $32.28, Charts) shares rose on news that the automaker will continue talking with Renault-Nissan about a potential alliance. Intel (up $0.43 to $20.39, Charts) rose after a Federal Judge late Tuesday threw out substantial parts of Advanced Micro Devices (down $0.67 to $25.32, Charts)' anti-trust lawsuit against the chipmaker. Fellow Dow component Verizon Communications (down $1.18 to $36.78, Charts) slumped 3 percent as investors took a "sell the news" response to the company's announcement that it will cost about $18 billion for it to upgrade its telephone network so it can sell cable television and high-speed Internet connections. Market breadth was positive. On the New York Stock Exchange, winners beat losers 9 to 7 as 1.45 billion shares changed hands. On the Nasdaq, advancers topped decliners by a narrow margin as 1.78 billion shares changed hands. U.S. light crude oil for November delivery rose $1.95 to $62.96 a barrel on the New York Mercantile Exchange, after falling earlier on a strong gain in inventories. COMEX gold for December delivery rose $6.20 to $603.30 an ounce. Treasury prices dipped, with the yield on the benchmark 10-year note rising to around 4.59 percent from 4.58 percent late Monday. Bond prices and yields move in opposite directions. In currency trading, the dollar gained modestly versus the yen and was little changed against the euro. |
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