Dow finishes above 14,000 for first time since 2007

NEW YORK (AP) — The Dow closed above 14,000 on Friday for the first time in more than five years.

Sure, it was just a number on a board. But it was enough to raise the hopes of some investors and cause others concern about an overheated market. And it brought reminders of a different era, back before the financial crisis rocked the world economy.

The Dow Jones industrial average, a stock market index that is supposed to be a benchmark for how the entire market is faring, had been rising fairly steadily for about a month. On Friday, strong auto sales and optimism about U.S. jobs pushed it over the mark. The Dow is now just 155 points away from its highest close ever.

"There's a newfound enthusiasm for the equity market," said Jim Russell, regional investment director at U.S. Bank Wealth Management in Minneapolis.

But market watchers were divided over what the Dow milestone — or even what a potential new all-time high — really means. To some, it's an important booster to hearts and minds, making investors feel optimistic and thus more willing to bet on the market.

"The Dow touching 14,000, it matters psychologically," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York. "It attracts smaller investors."

And those investors, until recently, had been shying away from stocks. Since April 2011, investors have pulled more cash out of U.S. stock mutual funds than they've put in, according to the Investment Company Institute. In the past three weeks, though, that trend has reversed, which could make January the first month in nearly two years where stock-focused funds had a net inflow.

To others, though, Dow 14,000 is nothing but a number, a sign more of how traders feel than of the economy. And it's not even the best number on the board, some traders say. Professional investors usually pay more heed to the Standard & Poor's main index, which tracks 500 companies compared to the Dow's 30. The Dow garners attention, they say, because it's more familiar to the general public.

Southwest Florida financial advisers were optimistic after the market hit its benchmark Friday.

David Porter, an Edward Jones Investments financial adviser, whose office is at Coconut Point mall in Estero, said financial advisers are optimistic going forward, but they aren't making drastic moves on investors' portfolios based on the recent market performance.

"It's important that people structure their portfolio (allocation of their investments) based on their long-term objectives, as opposed to the short-term performance of the market and stick with high-quality investments," Porter said.

Asked how much longer until the market hits a new high, Porter said he couldn't predict. But he said that is his response to clients and that they should focus on their long-term objectives and control the allocation of their investments.

"Clients' investments need to be structured based on their long-term financial goals and individual situations, not how they feel about the stock market or the current political environment and challenges that they may believe lie ahead," Porter said.

The Dow Jones industrial average climb Friday is significant for the equity market, said Andy Hill, president of Andrew Hill Investment Advisors in Naples.

"Right now, investors are buying in," Hill said.

Hill said investors who were too conservative since the market crash are now considering how to allocate their investments in the equity market. Meanwhile, the S&P 500 is less than 5 percent from reaching its all-time high since July 2007.

Hill said he believes the equity market can continue strong, but also could have a setback.

Joe Gordon, managing partner at Gordon Asset Management in North Carolina, wasn't celebrating Friday. He thinks the gains won't last. The fact that small investors are finally piling back in the stock market, he said, is not a reason for optimism but a sign that it's getting overhyped and due to fall.

After the Dow hit its all-time record in 2007, it fell almost steadily for the next year and a half. It lost more than half its value before starting to tick back up again.

"It is good trivia to talk about on television and the radio," Gordon said, referring to the 14,000 mark. "It's meaningless to the average professional." And for workers still unemployed by the financial crisis, he said, "it really means nothing to them."

If there is dissent over what Dow 14,000 signifies, what's undeniable is that it's a rarefied event. Before Friday, the Dow had closed above 14,000 just nine times in its history. The first time was in July 2007; the rest were in October of that year.

The last time the Dow closed that mark was Oct. 12, 2007, when it settled at 14,093.08. It had reached its all-time record, 14,164.53, three days before that.

For the average investor, that was all back when the stock market still seemed like a party. Housing prices were starting to ebb but hadn't cratered. Jobs were abundant, with unemployment at 4.7 percent — compared to 7.9 percent now. Lehman Brothers still existed. So did Bear Stearns, Wachovia and Washington Mutual.

The Dow ended Friday 149.21 points higher to 14,009.79. The other indexes were also up. The S&P 500 rose 15.06 to 1,513.17. The Nasdaq composite index was up 36.97 to 3,179.10.

Auto sales helped. Toyota, Ford, GM and Chrysler all reported double-digit gains for January.

The government jobs report that pushed stocks forward was mixed, but traders chose to focus on the positive. The U.S. said it added 157,000 jobs in January, which was in line with expectations. Unemployment inched up to 7.9 percent from 7.8 percent in December. Many economists, though, were encouraged because the government now says that hiring over the past year was higher than originally thought.

The jobs number is based on a survey of employers. The unemployment rate is based on a separate survey of households, which is why they can diverge.

Among stocks making big moves:

—Drugmaker Merck fell more than 3 percent, down $1.42 to $41.83. Its fourth-quarter profit suffered because of competition from generic medicines against its blockbuster allergy drug Singulair.

— Insurance company MetLife rose more than 2 percent, up 86 cents to $38.20, after saying it plans to buy the largest private pension fund administrator in Chile.

— Zoetis, an animal health business that Pfizer just spun off, made its debut on the stock market. It shot up 19 percent, rising $5.01 to $31.01.

Posted earlier

NEW YORK — The Dow Jones industrial average climbed above 14,000 for the first time since the Great Recession.

The index rose as high as 14,000.97 in early trading. The index last traded above 14,000 in October 2007.

The Dow has gained 6.7 percent since the start of the year.

A budget deal, struck at the start of the year in Washington, that allowed the U.S. to avoid the "fiscal cliff" was the catalyst for a January rally. Investors then pushed stocks higher amid optimism that the housing market is maintaining its recovery and that the jobs market is slowly healing.

The index has more than doubled since falling to close at low of 6,547.05 March, 3, 2009 after the Great Recession.

EARLIER:

NEW YORK — The U.S. jobs report pushed the stock market forward on Friday, putting the benchmark Dow Jones industrial average within striking distance of 14,000, a milestone it hasn't reached since before the financial crisis.

Overall, the government's jobs report was mixed, but traders chose to focus on the positive. The U.S. said it added 157,000 jobs in January, which was in line with what traders had been expecting. Unemployment inched up to 7.9 percent from 7.8 percent in December. But, encouragingly, the government also reported that hiring over the past two years has been higher than it originally thought.

The jobs number is based on a survey of employers, and the unemployment rate is based on a separate survey of households, which is why they can diverge.

In early trading Friday, the Dow shot up 78 points to 13,938. The Standard & Poor's 500 rose seven to 1,505. The Nasdaq composite index was up 19 to 3,161.

The Dow hasn't closed above 14,000 since Oct. 12, 2007. That time, more than five years ago, was almost a different era — before signs of the devastating financial crisis were apparent to the average observer.

Lehman Brothers still existed. So did Bear Stearns, Wachovia and Washington Mutual. Housing prices were starting to ebb, but they hadn't cratered. The unemployment rate was 4.7 percent, meaning jobs were abundant.

In all, the Dow has closed above 14,000 only nine times in its history. Eight were in October 2007. One was earlier, in July 2007.

It's not far from its all-time high, 14,164.53, which it reached on Oct. 9, 2007. A year later, in the depths of the financial crisis, it had shed nearly 40 percent of its value.

The Dow is an index of 30 big companies, and its purpose is to represent how the broader stock market is faring. It's more a representation of how traders are feeling about the economy than the economy's underlying fundamentals, but hitting 14,000 would still be an important psychological milestone.

In Europe, tentative and incremental signs of a recovery were enough to push up stocks in France, Britain and Germany. December unemployment in the European Union was lower than analysts had feared, inflation unexpectedly fell, and a survey raised hopes of some growth in the manufacturing sector.

But there were also reminders that the debt problem is far from solved. The Netherlands was also forced to take over one of its major banks, to try to stave off a collapse. In Greece, dock workers extended a strike over the government's spending cuts.

Among companies making big moves:

—Drugmaker Merck fell more than 3 percent, down $1.49 to $41.76. Its fourth-quarter profit suffered because of competition from generic medicines against its blockbuster allergy drug Singulair.

__Insurance company MetLife rose more than 1 percent, up 46 cents to $37.80, after saying it plans to buy the largest private pension fund administrator in Chile.

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