New York • It came and went in a flash, a number on a board for seconds at a time, but its symbolic power couldn’t be dismissed.
The Dow Jones industrial average, powered higher all year by optimism that the economic recovery is finally for real, crossed 13,000 on Tuesday for the first time since May 2008.
The last time the Dow occupied such rarefied territory, unemployment was a healthy 5.4 percent, and Lehman Brothers was a solvent investment bank. Financial crises happened in other countries, or the history books.
The milestone Tuesday came about two hours into the trading day. The Dow was above 13,000 for about 30 seconds, and for slightly longer at about 10 a.m. and 11:30 p.m. MST, but couldn’t hold its gains. It finished up 15.82 points at 12,965.69.
Still, Wall Street took note of the marker.
It was just last summer that the Dow unburdened itself of 2,000 points in three terrifying weeks. S&P downgraded the United States credit rating, Washington was fighting over the federal borrowing limit, and the European debt crisis was raging.
A second recession in the United States was a real fear. But the economy grew faster every quarter last year, and gains in the job market have been impressive, including 243,000 jobs added in January alone.
"Essentially over the last couple of months you’ve taken the two biggest fears off the table, that Europe is going to melt down and that we’re going to have another recession here," said Scott Brown, chief economist for Raymond James.
The tumult of last summer and fall left the Dow as low as 10,655. Its close Tuesday put it 22 percent above that low. The Dow is 1,199 points from an all-time high, a 9 percent rally from here.
A long-awaited deal to cut the debt of Greece and prevent a potentially catastrophic default, announced before dawn in Europe after 12 hours of talks, helped the Dow clear 13,000.
Under the bailout deal, Greece will get $172 billion, from other European nations and the International Monetary Fund. In a separate deal, investors in Greek bonds will forgive around $141 billion in debt.
After months in which talks crawled along and vague headlines yanked the market up and down, the conclusion was almost anticlimactic because the markets were already expecting an agreement.
European markets didn’t take the news as well. Stocks closed down 3.5 percent in Greece, where stocks have lost 80 percent of their value since 2007. Stocks declined less than 1 percent Tuesday in Germany, France and Britain.
Investors noted that Greece remains in deep recession. Its bond investors will take a 53.5 percent loss on the face value of their bonds, which could discourage future investment.
In the U.S., investors were cheered by earnings from Home Depot, watched closely as a barometer of American spending on homes, and Macy’s. Wal-Mart missed Wall Street expectations, and its stock lost 4 percent, worst among the 30 stocks in the Dow.
The Dow has climbed 6 percent this year and has not lost 100 points on any day. The Greek debt crisis may be receding, but high gasoline prices are emerging as a threat to the economic recovery, and thus the stock market.
A gallon of regular gas costs $3.57 on average, the highest on record for this time of year. With tension building over Iran’s nuclear ambitions, Iran has halted oil exports to Britain and France and threatened to stop shipping to other European countries.
The price of oil settled at $106.25, up $2.65 for the day and its highest level since last May. The price jumped more than $1 in about 20 minutes after Iran’s foreign ministry spokesman told reporters that a U.N. team visiting Iran has no plans to inspect the country’s nuclear facilities and will only hold talks with Iranian officials.
"That was the olive branch the market was holding onto," said Phil Flynn, an analyst for the brokerage PFGBest. "If they’re not going to discuss the nuclear program, then we’re a lot closer to a conflict than further away," he said.
Airline stocks got clobbered. United Continental lost 9 percent, Delta Air Lines 7 percent. The Dow transportation average lost 1.5 percent.
Materials, telecommunications and energy companies led the industries gaining ground. Health care companies, makers of consumer staples and utilities, traditionally stocks to own in more cautious times, were lower.Next Page >
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