Dow closes at highest level of year, nears record
NEW YORK — The Dow rose to its highest close of the year on Tuesday, ending 146 points from a record. Stocks gained after impressive results from two big consumer brands.
The Dow Jones industrial average closed up 47.46 to 14,018.70, putting it within 1 percent of the record close of 14,164.53 set in October 2007. The Standard & Poor's 500 gained 2.42 points to 1,519.43, also close to its record.
In a quiet day of trade, stocks were driven higher by beauty products maker Avon and luxury clothing and accessories company Michael Kors, whose results impressed investors. Consumer spending accounts for 70 percent of economic activity in the United States.
Financial and home building stocks also lifted markets, led by Bank of America and Masco Corp, which notched some of the day's biggest gains.
The Dow has surged at the start of the year, logging its best January in almost two decades, after lawmakers reached a last-minute deal to avoid the “fiscal cliff” of sweeping tax increases and spending cuts. Investors also are becoming more optimistic that the housing market is recovering and that hiring is picking up.
The 30-member Dow has now closed above 14,000 twice this month. Before February, the index had closed above that level just nine times in its history. The first time was in July 2007; the rest were in October of that year.
Avon's stock price jumped $3.51, or 20 percent, to $20.79 after the company posted a fourth-quarter loss that wasn't as bad as analysts expected. The company hopes to save $400 million by slashing costs. Michael Kors rose $5, or 9 percent, to $62 after reporting earnings that beat analysts' predictions.
About 70 percent of companies in the S&P 500 have reported earnings for the fourth quarter. Analysts are projecting that earnings will rise 6.4 percent for the period, an improvement from the 2.4 percent growth reported in the third quarter, according to S&P Capital IQ.
The Dow has now advanced 7 percent this year, and the S&P 500 is up 6.6 percent.
In other trading Tuesday, the Nasdaq composite was down 5.51 points at 3,186.49.
Investors may have become too optimistic about the outlook for stocks, said Uri Landesman, president of hedge fund Platinum Partners.
“The market is priced for perfection,” said Landesman. “The odds of a disappointment are very, very high.”
Landesman predicts that the S&P 500 will climb past its record and rise as high as 1,600 by April before then slumping as low as 1,300 as company earnings start to disappoint investors. The record close for the S&P 500 is 1,565, reached in October 2007.
Investors appear to be supporting the market by stepping in to buy stocks when prices dip, said JJ Kinahan, chief derivatives strategist at TDAmeritrade. The S&P 500 has gained for six straight weeks since the start of the year.
Confidence in the outlook for global growth has strengthened among asset managers in recent months, according to a Bank of America Merrill Lynch survey. The poll found that 59 percent of investors believe that the global economy will strengthen in the year ahead, in line with the reading in January. The outlook for growth had improved in the four previous months.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- States clear way for startups to use crowdfunding
- Visual search still hampered by image issues
- Hotel extras? Oh, yes, there’s a fee
- Students walk shop class path to excellence
- Lower your cable bill by streaming shows
- Healthy PA expands number of recipients but cuts benefits
- U-PARC houses companies ranging from innovative to traditional
- PNC building virtual branch
- Google Maps opens business doors to online views for shoppers
- Pa. job market weakens; unemployment rate rises to 5.7 percent
- UPMC earnings turn positive, but pressures mount