Dow nears record, fueled by strong housing
By STEVE ROTHWELL
THE ASSOCIATED PRESS | February 28,2013
Traders work on the floor at the New York Stock Exchange in New York on Wednesday.
NEW YORK — The Dow came within 60 points of its all-time high Wednesday as it rose sharply for a second straight day.
The market surged following more evidence that the Fed will keep interest rates low, housing will keep recovering and shoppers aren’t pulling back on spending, though they’re paying more in Social Security taxes this year.
The gains were broad: Twenty-nine of 30 stocks in the Dow Jones industrial average rose. All 10 industries in the Standard and Poor’s 500 index climbed.
The Dow Jones industrial average closed up 175.24 points, or 1.2 percent, to 14,075.37. The index is now 89 points from its record close of 14,164.53 reached in October 2007. It rose steadily from the opening bell, then peaked near the record at 3:26 p.m. Eastern Time, before easing slightly in the last half hour of trade.
The Dow has surged 290 points in the past two days, erasing its drop of 216 points Monday when inconclusive results from an election in Italy renewed worries that Europe’s fiscal crisis could flare up again.
“The market psychology has clearly shifted. It’s no longer sell the rally, it’s buy the dips,” said Dan Veru, chief investment officer of Palisade Capital Management. “The economic data continues to be strong.”
The Standard and Poor’s 500 index gained 19.05 points, or 1.3 percent, to 1,515.99. That put it within 49 points of its record close of 1,565, also in October of 2007.
The Nasdaq composite rose 32.61 points, or 1.3 percent, to 3,162.26.
Investors were also encouraged Wednesday that Federal Reserve Chairman Ben Bernanke stood behind the central bank’s low-interest-rate policies as he faced the House Financial Services Committee.
His comments dissipated worries about the bank’s resolve to keep up the program. Those worries sprang up last week when minutes from the bank’s last policy meeting revealed disagreement among Fed officials.
Also, the number of Americans who signed contracts to buy homes rose in January from December to the highest level in almost three years.
The report continued a string of positive housing news. Sales of new homes jumped 16 percent last month to the highest level since July 2008, the government reported Tuesday.
Home builder stocks rose for the second day in a row. PulteGroup climbed 25 cents, or 1.3 percent, to $19.30, after rising 5.7 percent the day before.
“Some encouraging news for the bulls has been the housing data that has come out over the past couple of days,” said Todd Salamone, director of research at Schaeffer’s Investment Research.
The analyst said he remained “extremely bullish,” on stocks in the medium and long-term, but cautioned that a pullback may lie ahead in coming days after the year’s strong gains.
Stocks have surged since the start of the year. The Dow is up 7.4 percent and the S&P 500 has climbed 6.3 percent.
But rising even more is the Dow Jones transportation average, which is up 13 percent for the year to 5,989.37. Airlines like Delta and Alaska Air are powering the gains.
“If the economy is doing well you’ve got to be moving stuff around,” said Phil Orlando, chief equity strategists at Federated Investors. “You’ve got to be moving people on airplanes, you’ve got to be moving cargo with trains or trucks, or UPS.”
Discount retailers rose Wednesday. Dollar Tree jumped $4.31, or 11 percent, to $45.39 after reporting a 22 percent profit increase. Dollar General rose $1.61, or 3.6 percent, to $46.56. Family Dollar Stores rose $1.39, or 2.5 percent, to $57.68.
Earnings for S&P 500 companies will climb 7.8 percent in the fourth quarter, the third straight quarter of growth, according to data from S&P Capital IQ.