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February 1, 2013

Dow flirts with 14K, pushed higher by jobs report

From The Associated Press

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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