Stock indexes reach old heights

SAN FRANCISCO – U.S. equities finished modestly higher Friday, with major indexes scoring gains for the week to end at their highest levels in years as lackluster August jobs data fueled speculation that the Federal Reserve may start another round of monetary stimulus.

“The recent market rally has been the result of massive short-covering and anticipation of more liquidity courtesy of the Fed,” said Jeffrey Sica, president of Sica Wealth Management. “The jobs report of today reinforces the likelihood of more economic stimulus being initiated in the September meeting.”

But “the market celebration will be short-lived as investors question whether another round of money printing is too little or too late to help the economy,” he added.

The Dow Jones industrial average closed at 13,306.64, its highest level since December 2007.

Shares of Caterpillar Inc. rose 3.9 percent and Bank of America Corp. added 5.4 percent, leading the gains on the index, while Kraft Foods Inc. saw the biggest decline, down 5.5 percent after providing an outlook for its grocery business.

The S&P 500 index marked its highest close since January 2008.

Within the index, mining and steel companies were standouts, finding support from fresh merger talks, demand from China and higher commodity prices.

“While it looks like stocks didn’t move all that much, underneath the averages there is a lot of bullish price action under way,” said Michael Gayed, chief investment strategist at Pension Partners LLC.

“High beta small-cap stocks continue to meaningfully outperform, the VIX (CBOE Market Volatility Index) continues to price poorly, and defensive sectors, which money flees to in times of fear, are collapsing,” he added. “Fear over a 2008 repeat is now turning into fear of global monetary shock and awe, and the potential inflationary aspects of it.”

The Nasdaq composite index closed at 3,136.42, its highest finish since November 2000.