February 21, 2012 in Business

Dow breaks 13,000 for first time since ’08 crisis

Associated Press

AP/Seth Wenig photo

Former First Lady Laura Bush, second from right, rings the opening bell at the New York Stock Exchange before in New York today. U.S. stocks are opening higher and the Dow Jones industrial average is nearing 13,000 after Greece secured a bailout deal to keep it from default.
(Full-size photo)

NEW YORK — The Dow Jones industrial average crossed 13,000 today for the first time since May 2008, when the Lehman Brothers investment bank was solvent, unemployment a healthy 5.4 percent and the worst of the Great Recession months ahead.

The milestone came about two hours into the trading day. The stock market got the final push from strong corporate earnings reports and a Greek bailout deal intended to prevent the next financial crisis.

The Dow last closed above 13,000 on May 19, 2008. The next day, it crossed under 13,000, not to return for almost four years. The Dow fell as low as 6,547 on March 9, 2009. It has almost doubled since then.

The 13,000 level is a psychological milepost, but in a market built on perception, it could influence more cautious investors to pump more money back into the stock market, analysts said.

“You need notches along the way to measure things, and that’s as good as any,” said John Manley, chief equity strategist for Wells Fargo’s funds group. “Is 50 older than 49 and a half? Yes, by six months. Do those six months really make a difference? Probably not. But it does give us a fixed point, something we can look at.”

Stocks dropped back slightly after hitting the mark. Just after 11:45 a.m. EST, the Dow was up 37 points at 12,987. In other trading, the Standard & Poor’s 500 was up five points at 1,366. The Nasdaq composite index was up nine points at 2,961.

Just last summer, the Dow unburdened itself of 2,000 points in three terrifying weeks. S&P downgraded the United States credit rating, Washington was fighting over the federal borrowing limit, and the European debt crisis was raging.

The Dow fell as low as 10,655 in the fall. The 13,000 marker is a 22 percent rally from that low. The Dow is within 1,200 points of its all-time closing high — 14,164, set Oct. 9, 2007.

Under the bailout deal, Greece will get (euro) 130 billion, or about $172 billion, from other European nations and the International Monetary Fund. It will also owe (euro) 107 billion less to investors who own its government bonds.

After months of the talks crawling along and vague headlines yanking the market up and down, the conclusion was almost anticlimactic, with an agreement already expected by the markets.

European markets fell after the Greece deal was announced. Stocks were down almost 4 percent in Greece, a little more than 1 percent in Spain and less than 1 percent in France and Britain. But the euro rose slightly at $1.32, which could be seen as a sign of confidence in European markets.

Investors noted that Greece remains in deep recession. Its private-sector investors were also forced to take a 53.5 percent loss on the face value of their bonds, which could discourage future investment.

The U.S. stock market has climbed steadily this year, primarily because of optimism about the economy. High gasoline prices are emerging as a chief concern for the economic recovery for the rest of the year, though.

A gallon of regular costs $3.57 on average, 40 cents more than a year ago and the highest on record for this time of year. With tension building over Iran’s nuclear ambitions, Iran has halted oil exports to Britain and France and threatened to stop shipping to other European countries.

On Tuesday, U.S. markets enjoyed strong earnings reports from several big-name companies, including Home Depot and Dollar Thrifty. The exception was Wal-Mart, which reported a 15 percent drop in quarterly profits.

Overall, though, investors seemed comfortable moving money into the higher-risk stock market and out of safer investments like government bonds. The yield on the government’s benchmark 10-year Treasury note rose to 2.05 percent from 2.01 percent Friday, a sign that fewer investors wanted the bonds.

Among big movers today:

—Wal-Mart fell 4 percent after missing analysts’ expectations for revenue and per-share earnings. The world’s biggest retailer has lost some of its momentum in the past couple of years with strategic errors like a brief foray away from “everyday low prices,” which turned off cash-strapped bargain hunters, and a short attempt to declutter its shelves and offer fewer items, which turned off customers who went there for the convenience.

—Home Depot rose 2 percent after beating analysts’ expectations for revenue and per-share earnings. The home-repair giant has been hurt by the dour housing market, which has led homeowners to take on fewer expensive home renovations. Warm weather helped drive small-scale home projects in the latest quarter.

—Barnes & Noble climbed 5 percent despite missing expectations on revenue and per-share earnings, as rising costs offset higher sales of both traditional books and digital books. But investors seemed encouraged that the bookstore chain, a survivor in an era that has felled competitors like Borders and Waldenbooks, plans to introduce a cheaper Nook to compete with Amazon’s Kindle Fire. It’s also been shifting store inventory away from books toward games, toys and other gifts, a strategy that seems to be paying off.

27 comments on this story so far. Add yours!

meadman on February 21 at 9:21 a.m.
Poor old tired Republicans just can’t catch a break…..! HAHAHA
greyhound2 on February 21 at 9:21 a.m.
Gas prices are going up due to speculators hording inventory again hoping to unload the same in June for a $2 gallon gain, as already being broadcast by the media. The Iran thing is just a smoke screen.
Dazzeetrader11 on February 21 at 9:58 a.m.
Has nothing to do with the economy mead. It’s those big guys on top (the 1%) . Unemeployment today is now 9%. and trending up. This is good new for big time Wall St Investors…not you though…Obama is letting those guys have at it again for support.
Unemployent, gas prices all on the way back up.
SO yes…it IS good new for the R’s but bad news for the USA. Now, figure in Iran’s next move (orchestrated by a very inexperienced Obama) and gas will be at $5 easily. It’s how an economy get’s shut down by a president who has no business being in the job.
detroitdude on February 21 at 10:02 a.m.
^^^ lol
IHike4Fun on February 21 at 10:29 a.m.
If you want to catch the DOW above 13K I suggest a fast shutter speed.
jddavis on February 21 at 10:55 a.m.
Shame on you who invest in corporate America!
misjustice on February 21 at 11:43 a.m.
“Dow breaks 13,000 for first time since ’08 crisis”
Must be Obama’s fault!
Oh, dang it!
johnclarke on February 21 at 11:56 a.m.
The market is too high, again. Oh well, at least Wall Street can get back to doing nothing for money.
soccermomsusie on February 21 at 11:58 a.m.
Darn You OBAMA!!!
Come on Cathy McMorris Rodgers! Come on Republicans! LET’S SINK THIS ECONOMY AGAIN!!!!!
Putting millions out of work is worth it to put one MUSLIM, NAZI, COMMUNIST, KENYANIST, DADAIST, ANDROIDIST, ROSICRUCIANIST, DEMONCRATIST PRESIDENT OUT OF WORK!!!!
He is so smug just because he undid the handiwork of the BEST PRESIDENT EVER - GWB!!!
CATHY, GET BEHIND BONEHER NOW!!! WONDER TWINS POWER UNITE!!!! Crush! Kill! Destroy this recovery!
HEAR OUR VOICE!!!
garyc on February 21 at 12:48 p.m.
Oct. 2009 = 10 percent.
Jan. 2012 = 8.3 percent.
There’s your “upward” trend in unemployment.
http://www.google.com/publicdata/explore?ds=z1ebjpgk2654c1_&met_y=unemployment_rate&tdim=true&fdim_y=country:US&fdim_y=seasonality:S&dl=en&hl=en&q=unemployment+rate
mikeln on February 21 at 12:48 p.m.
This is just another bubble in the economy. Just like housing those who can will blow the bubble up, take the profit and stick it with a pin leaving yours and my retirement in the sewer.
polistra on February 21 at 12:48 p.m.
Bad sign. Means the small investors have lost their sense of danger yet again, and walked right into the jaws of the waiting vultures.
WHS on February 21 at 1:03 p.m.
While I am very glad to see all of these things, unemployment dropping, DOW increasing, etc… I am still not going to hold my breath. Too many radicals left to be bought and they can’t force the revolution if America is getting better inspite of their best efforts to the contrary… Which also gives HOPE once again. The majority of main street Americans are actually smarter than the righteous minority.
WHS
greyhound2 on February 21 at 1:12 p.m.
Can’t believe one poster credited Bush as the “best president ever”. The facts for 8 years show:
Launched two pointless wars in two worthless countries still ranging when he ducked out and left town.
Deliberately lied and deceived the American people about reason to invade Iraq which cost 4,000 American soldiers lives and crippled 30,000 others.
Led the charge to deregulate Wall Street which resulted in the financial collapse of 2008.
Led the charge to bail out the Wall Street banksters and fraudsters at the expense Main Street with now departed Paulson.
Led the charge in an attempt to gut social security and turn it over to the Wall Street fraudsters for them to plunder.
Led the charge to give massive tax breaks to his fraudster friends in the top 10% income bracket, as his reverse Robin Hood tactics transferred wealth from the poor to the rich.
Leaves office without being charged as a war criminal and jailed along with Cheney, Rice and the defense guy, but goes to baseball games surrounded by secret service agents at tax payer expense.
We don’t need any more people like this.
peacemonger on February 21 at 1:17 p.m.
More bad news!…….for the Republicant’s. But I’m sure they will do everything they can to stop this economy from gaining momentum just to make Obama look bad.
RedCedar on February 21 at 1:37 p.m.
Blue skies smiling at me
Nothing but blue skies do I see
Bluebirds singing a song
Nothing but bluebirds all day long
Never saw the sun shining so bright
Never saw things going so right
Noticing the days hurrying by
When you’re in love, my, how they fly
reservedparking on February 21 at 1:42 p.m.
Greyhound: You’re apparently not yet aware of the satirical nature of soccermom. Keep reading. It won’t take long. Enjoy!
Ashree_Simon on February 21 at 2:14 p.m.
Everyone will spin it according to their political leanings, but I just checked with my 401K Plan and it is telling me that this is pretty good news!
The_Seer on February 21 at 3:13 p.m.
I put all my money into hearing aid companies (the I-Pod generation will need them in droves) and laser tatoo removal.
I want to know why pension fund managers are allowed to invest in the stock market? How do I get my money out before they crash the market again?
dataxman on February 21 at 4:15 p.m.
Seer - the problem is even if you get out, you will probably go into a bond or money market fund. Money market funds are short-term bonds.
Seen the 70% Greek bondholders are taking?
dataxman on February 21 at 4:17 p.m.
^^^haircut Greek bondholders are taking
drywitt99 on February 21 at 5:52 p.m.
Dow Jones UP…….
Unemployment DOWN…….
That DAMN Kenyan Islamic socialist!!!!!
bdr on February 21 at 7:02 p.m.
Republican school teachers must have taught their kids the Dow must be at zero to be good.
Until the Republicans can get back in office remember to give discounts to the rich , hold their doors and give up your seats to them, yield your driving path to them. Keep the rich from spending their money anyway possible. :]
greenlibertarian on February 22 at 12:25 a.m.
dataxman on February 21 at 4:15 p.m.
Seer - the problem is even if you get out, you will probably go into a bond or money market fund. Money market funds are short-term bonds.
Seen the 70% [haircut] Greek bondholders are taking?
Two years ago, It would have been only 50% if TPTB hadn’t dragged the damn thing out forever.
flyerd1 on February 23 at 6:36 p.m.
First of all, I did not vote for Bush. That being said…
Greyhound:
1) “Deliberately lied and deceived the American people about reason to invade Iraq which cost 4,000 American soldiers lives and crippled 30,000 others.”
— Actually, the mere fact that Iraq was in violation of peace agreements from the 91’ war was enough reason. They also continually violated UN resolution “deadlines” that were never enforced. A deadline not enforced is no deadline at all and there comes a point when you put your foot down. Bombs stop falling due to “agreements“. If those agreements aren’t adhered to it’s understood that bombs can start falling again. If Japan or Germany had stopped abiding by the conditions of their surrender they would’ve found themselves in the same situation.
2) “Led the charge to deregulate Wall Street which resulted in the financial collapse of 2008.”
— Deregulation was certainly part of the cause. The “make homes affordable” act during the Clinton administration was another. People taking loans out without fully reading/understanding the contracts was another. Mrtg brokers pushing as much as they could while the getting was good was another. Appraiser’s pushing their appraisals higher and higher to meet the underwriting requirements of mrtg’s was another. Plenty of blame in this one to go around…
flyerd1 on February 23 at 10:50 p.m.
Greyhound: “Led the charge to bail out the Wall Street banksters and fraudsters at the expense Main Street with now departed Paulson.”
—That’s the common talking point argument of “we shouldn’t have bailed those banks out”.

However, it’s patently ridiculous to rail on that “nothing” should have been done. Everything from consumer spending, to stock/commodity values, to home purchasing, etc. is determined by the confidence of people. Unchecked via a “bailout” or “stimulus” plan, there would have been greater panic. Panic which would’ve lead to much more severe *runs on the banks than we observed during the 08/09’ crisis.
The housing and overall economic recovery would have been much better (and still could be with slightly different actions) if the original Paulson plan had been stuck to as far as buying up mortgages and mortgage backed securities. The gov’t could have dealt “directly with” homeowners to negotiate both fixed rates of 4-5% and balance write downs (where appropriate). We would’ve achieved the “net goals” of stabilizing banks balance sheets, the economy, job loss, and citizen fear, in a much more efficient manner, thereby producing a better recovery.
The result of these mrtg solutions would have been avg monthly pymnt reductions of $500-1200 per month x millions of homes (for ex: $850/mo x 4M homes = 3.4 Billion/mo….around 1.5B/mo could go directly back into economy). Even today, if the banks took these actions, it would result in 1) long term additions to consumer spending ability due to those reduced payments. 2) far less foreclosures and associated feelings of a loss of wealth (for neighbors too). as well as . 3) Greatly increased, and consistent, “consumer confidence” and product demand due to the first 2 points, which would increase “business sentiment”, spending, and hiring. The problems encountered in achieving these results were/are:
Continued…
flyerd1 on February 23 at 10:58 p.m.
…Continued:
a. Most people’s feelings of “I’m against bailouts”, which are typically due to a baseline misunderstanding of the impact on the economy of banks and consumer fear/confidence. Meaning, they’re just against what they perceive as handouts or “good deals” that someone else is getting and “they’re not”. Even though, as a result, they’d benefit as well.
b. The inherent difficulty of seeing the forest (ultimate nat’l economic benefits) for the philosophical trees (Meaning philosophical hurdles of allowing up-front deals like mrtg write downs, interest rate reductions, bank “bailouts”, etc. as opposed to just letting the chips fall).
c. Reinforcement of points a&b by the parroting of political rhetoric and talking points tailored to excite the respective political bases and aid re-election. Rhetoric spewed by many people (incl politicians) who themselves didn’t have enough economic understanding to make “educated” decisions irt the bank bailout packages. Therefore, they based their decisions on the furor from constituents who understood even less, but were very vocal all the same. The net result was/is a constituents popular opinion vote vs. a what’s the right decision vote. If popular opinion is/was so important we could have just put it to a nat’l vote and achieved the same result regarding the 1st “bank bailout” vote. When does “leadership” (what elected rep’s are supposed to posses) trump “popular opinion“?
d. Most importantly, failing to follow the original bailout plan idea and instead, opting to push money onto the assets side of the banks balance sheets to offset the liability side that was making them look potentially insolvent. This “propping” them up method (which required additional “props”) was terrible compared to the much better option of buying the mortgage related assets (at a discount of course) which would have had a better net result as far as fixing their balance sheets and improving the overall recovery.