Finally, a lucky 13 for Dow
Blue-chip rally pushes industrial average to a record close on upbeat corporate news, durable-goods orders.
NEW YORK (CNNMoney.com) -- The Dow industrials jumped above 13,000 for the first time Wednesday, thanks to upbeat corporate earnings and a solid reading on the economy, which also propelled the broader market.
The Dow Jones industrial average (up 135.95 to 13,089.89, Charts) jumped about 136 points, gaining 1 percent. The blue-chip leader crossed the 13,000 level within the first 90 seconds of trading. It backed off a bit after that but later hit a new intraday high of 13,107.45 in the afternoon.
Investors responded to solid earnings from Amazon, Corning, Boeing and others and a rise in durable goods orders - a key indicator of the strength of the economy. But the gains were also the extension of a broader market rally over the last few weeks, as part of the longer 4-1/2 year old bull market.
"I think we're seeing that Wall Street is resilient, which is significant after everything we've been through over the last few years," said Alan Skrainka, chief market strategist at Edward Jones.
He was referring to the challenges for the economy after the events of 9/11, as well as the war in Iraq - and the more recent scare about how the subprime mortgage lending fallout would impact the already struggling housing market.
Wednesday's gains were broad-based. The broader S&P 500 (up 15.01 to 1,495.42, Charts) index climbed 1 percent and ended at a fresh six-year high. The Nasdaq (up 23.35 to 2,547.89, Charts) added 0.9 percent, also ending at a new six-year high.
The Russell 2000 (up 5.71 to 832.07, Charts) index of small-cap stocks rose 0.7 percent and ended at an all-time high.
Treasury prices slipped, the dollar rose versus the yen and the euro, oil prices jumped while gold ended lower.
After the close of trade, Apple (Charts, Fortune 500) reported quarterly earnings and sales that rose from a year earlier and beat forecasts, sending shares 5 percent higher in extended-hours trading.
Also after the close, wireless chipmaker Qualcomm (Charts, Fortune 500) reported higher earnings and revenue that beat estimates. The company also forecast that current quarter and full year earnings will top forecasts.
Dow component's 3M (Charts, Fortune 500) and Exxon Mobil (Charts, Fortune 500) report quarterly earnings Thursday. Other companies due to report include Ford Motor (Charts, Fortune 500), Valero Energy (Charts, Fortune 500) and Bristol-Myers Squibb (Charts, Fortune 500).
"We're seeing that the market continues to be driven by the earnings, which have been good," Skrainka added. He said that investors should be able to absorb any expected slowdown in earnings growth in 2007, as it follows 3-1/2 years of double-digit percentage growth.
With 47 percent of the S&P 500 having reported, earnings are currently on track to have grown 6.2 percent from a year ago, according to the latest Thomson Financial estimates.
In addition to earnings, adding to the momentum Wednesday was a surprisingly strong reading on durable goods orders, which rose 3.4 percent in March, above forecasts.
Another report, released today showed that March home sales rebounded by less than expected from February.
In the afternoon, the Fed's "Beige Book" periodic reading on the economy showed that most areas of the country saw only moderate expansion.
While the 30-stock Dow is at an all-time high, the broader S&P 500 index remains below its all-time high of 1,527.46 hit in March 2000 at the end of the late-90s tech boom. The Nasdaq composite is nowhere near its all-time high of 5048.62, also from March 2000.
Although the Dow is a narrow index, its crossing of the 13,000 mark is nonetheless symbolic of the strength of the 4-1/2 year old bull market.
"I think it means that the beat goes on and that, specifically, the underlying forces which have been driving the market for more than four years are still intact," said William Hummer, principal at Wayne Hummer Inc.
He said those forces included the promise of economic expansion, probability that inflation will continue to be subdued and a still confident consumer.
Looking out to the rest of 2007, Hummer said that while pullbacks are necessary so as to sustain the upward trend, any such declines would probably be short lived.
Stock gains were broad based, with 29 out of 30 Dow stocks rising.
Leading the advance was Alcoa (up $1.81 to $35.76, Charts, Fortune 500), which jumped 5.3 percent after the aluminum maker said it was considering selling its packaging and consumer segment, responsible for about 10 percent of its 2006 revenue. The company also said it was looking to sell several other smaller units.
Other big Dow gainers included IBM (up $2.97 to $101.46, Charts, Fortune 500), Intel (up $0.32 to $22.26, Charts, Fortune 500), Honeywell (up $1.09 to $53.99, Charts, Fortune 500), American Express (up $1.41 to $62.32, Charts, Fortune 500) and Exxon Mobil (up $1.32 to $79.92, Charts, Fortune 500).
In earnings news, Amazon.com (up $12.06 to $56.81, Charts, Fortune 500) reported higher quarterly sales and earnings that topped estimates late Tuesday. The online retailer also said second-quarter and full-year revenue would top current estimates. Shares jumped 27 percent Wednesday.
Wednesday morning, Dow component Boeing (up $1.02 to $94.69, Charts, Fortune 500) reported higher quarterly sales and earnings that topped estimates. However, the aerospace behemoth also kept its financial forecast for 2007 unchanged. Shares inched lower.
On the downside, Sun Microsystems (down $0.67 to $5.27, Charts, Fortune 500) slumped over 11 percent after it reported higher quarterly sales that were short of forecasts late Tuesday. The company also issued a current-quarter sales forecast that is shy of estimates.
The bidding war for ABN Amro (up $2.46 to $49.86, Charts) heated up after a consortium of banks led by Royal Bank of Scotland offered offered to buy the bank for more than $100 billion, just a few days after the bank agreed to be bought by Barclays (up $1.73 to $58.58, Charts). The deal would be contingent on ABN Amro breaking its deal to sell its Chicago-based LaSalle unit to Bank of America for $21 billion.
Market breadth was positive. On the New York Stock Exchange, winners topped losers by 11 to 5 on volume of 1.68 billion shares. On the Nasdaq, advancers beat decliners 3 to 2 on volume of 2.71 billion shares.
U.S. light crude oil for June delivery rose $1.26 to settle at $65.84 a barrel on the New York Mercantile Exchange after the release of the mixed weekly oil inventories report.
COMEX gold for June delivery fell 30 cents to settle at $687.40 an ounce.
Treasury prices slipped, raising the yield on the 10-year note to 4.65 percent from 4.62 percent late Monday. Treasury prices and yields move in opposite directions.
In currency trading, the dollar gained modestly against the yen and was barely changed versus the euro.