Dow milestone follows surge of confidence

The Dow Jones industrial average rode a surge of confidence in the economy Tuesday to close above 13,000, a threshold it last crossed four months before the financial crisis of 2008 and the darkest days of the Great Recession.

The milestone extended a strong rally in stocks since the start of the year, and it came after a fitful week in which the Dow repeatedly floated above 13,000 only to fall back by the end of the trading day.

The Dow closed at 13,005.12, a close enough call that the gain of a single stock, Johnson & Johnson, made the difference. The Dow last closed above 13,000 in May 2008, four months before the fall of the Lehman Brothers investment bank and the worst of the crisis.

“I think it’s a momentous day for investor confidence,” said Jack Ablin, chief investment officer at Harris Private Bank. “What this number implies is that the financial crisis that we were all losing sleep over, it never happened, because now we’re back.”

Dow 13,000 comes at a time when Americans are feeling better about the economy than they have in a year. The Conference Board, a private research group, said its consumer confidence jumped to 70.8 in February, up from 61.5 in January.

The report came out at 10 a.m. and lifted the Dow above 13,000. It stayed there most of the day.

The average first pierced 13,000 Feb. 21 but fell back by the close. It floated above the milestone again on Friday and Monday but slipped below both days.

Tuesday’s gain puts the Dow 1,160 points below its all-time high, set Oct. 9, 2007. The recession began two months later.

The milestone could draw some fence-sitting investors back into the market and add to the gains, said Brian Gendreau, market strategist at Cetera Financial Group.

“Already here in the first two months, we’ve blown past the consensus expectations for the entire year, and that certainly gets people’s attention,” he said.

The Dow cruised to 13,000 the old-fashioned way, riding the economy higher. The unemployment rate has come down five months in a row, the first time that has happened since 1994.

Microsoft led the 30 stocks in the Dow with a gain of 1.7 percent for the day. Johnson & Johnson had the biggest price change. It gained 73 cents and was responsible for 5.52 points of the Dow’s gain, enough to clear the 13,000 level.

The price of gasoline has emerged as the latest worry. The price has risen 21 days in a row. Economists worry whether gas will climb high enough to cut into consumer spending in the rest of the economy.

“It’s important to remember that the stock market is not the U.S. economy, and the U.S. economy is not the stock market,” said Dan Greenhaus, chief global strategist for the brokerage BTIG. “Most people are likely to say, ‘Dow 13,000. So, where’s my job?’ ”