The Dow Jones industrials had a spectacular end this year and closed above 10,000 on Wednesday, and this was the first time in more than year that it closed at such a high end, following the upbeat profit reports from Intel and JPMorgan Chase.
The Dow Jones industrial average (INDU) rose 145 points or 1.5%, finishing at its highest point since Oct. 3, 2008, when it closed at 10,325.38.
The S&P 500 (SPX) index rose 19 points, or 1.8%, and the Nasdaq composite (COMP) added 32 points, or 1.5%.
The advance was broad-based, with 25 of 30 Dow stocks rising. JPMorgan Chase (JPM, Fortune 500), Caterpillar (CAT, Fortune 500), Chevron (CVX, Fortune 500), Hewlett-Packard (HPQ, Fortune 500), IBM (IBM, Fortune 500), 3M (MMM, Fortune 500), United Technologies (UTX, Fortune 500) and Exxon Mobil (XOM, Fortune 500) were the biggest contributors to the Dow’s gains.
According to Tom Schrader, managing director at Stifel Nicolaus. “Today’s market action is all about Intel and JPMorgan and just earnings in general,”
Schrader added that Nevertheless, “people are looking forward,”.He said that the weak retail sales report, released Wednesday, indicates that the economic recovery is not going to be smooth sailing. While 10,000 is significant on a psychological level, it is not especially meaningful on a technical level.
“I don’t put a lot of weight into it just because it’s a round number,” said Rick Bensignor, chief market strategist at Execution LLC. “The Dow isn’t a benchmark for most portfolio managers.”On that He said that the number isn’t going to bring in a new wave of buyers, not after the major gauges have spiked so much in the past seven months.
Since bottoming at 12-year lows in March of this year, the S&P 500 has surged a little over 61% as of Wednesday’s close, and the Dow has jumped 53%.
He also added that “If the market keeps moving higher it will be because the earnings continue to surpass expectations,”
Other than a few lower pullbacks, stocks have mostly managed to keep moving higher with the period of time , with investors jumping in to buy the dips on worries that they might miss the boat.. Repeated calls for a correction of 10% to 15% have gone unmet, and are likely to continue going unmet for the short term, Schrader said.”The problem is that it is consensus that we need a selloff and consensus is rarely right,” he added.
Earnings: Two Dow issues reported better-than-expected third-quarter results, following component Alcoa (AA, Fortune 500)’s better-than-expected profit report last week. The results have shown hopes that the third quarter could mark a turning point for corporate profits in the same way it seems to have marked a turning point for the economy.
JPMorgan Chase (JPM, Fortune 500) said it earned $3.6 billion in the quarter, as strength in its investment banking business showed loss during the period . The company said that consumer loan requirements are showing signs of stabilization, but may be the trend will not continue.
JP Morgan reported higher quarterly sales and earnings that topped analysts’ estimations ,and their Shares gained 3.3% Wednesday.
Late Tuesday, chipmaker Intel (INTC, Fortune 500) said quarterly sales and earnings fell from a year ago, but topped estimates.
Intel also issued a bullish forecast, saying that it expects fourth-quarter revenue of between $9.7 billion and $10.5 billion versus the $9.51 billion consensus. Intel also said it expects gross margins, a key measure of profitability, in the 59% to 65% range versus the 56.7% consensus. Shares gained 1.7% Wednesday.