NEW YORK -The Dow Jones industrials closed above 14,000 for the first time Thursday, based largely on strong earnings reports from companies such as Microsoft, International Business Machines Corp., network equipment maker Juniper Networks Inc. and business software company SAP AG.
The reports lifted stocks and boosted investors’ appetite for technology issues. However, the momentum could be short-lived as Google Inc. after the closing bell Thursday turned in a second-quarter profit that fell short of Wall Street’s high expectations.
Resurgent concerns about the health of subprime loans, which are made to borrowers with poor credit history, generally hurt financial stocks, while a report that a would-be suitor for Alcoa Inc. had lost interest kept the Dow Jones industrial average from extending its gains.
The flurry of corporate news Thursday coincided with Fed Chairman Ben Bernanke’s return to Capitol Hill for the second day of his midyear report to Congress in which he said problems such as foreclosures among holders of subprime mortgages are “likely to get worse before they get better.” Also, a research group predicted Thursday that the housing slump will cause the economy to contract slightly in coming months.
“I think we are seeing people trying to decide whether earnings are sustainable,” said Jeffrey Dunham, principal at Dunham &Associates in San Diego. He said the stock market’s recent run-up in part reflects investors’ desire not to miss out on gains.
“I don’t see any big conviction by anybody to leap into the market but we’re all terrified to not be players. It’s gone awfully far in an awfully short time and the market is trying to figure out ‘Is this a head-fake or is this the real deal?’”
The Dow rose 82.19, or 0.59 percent, to 14,000.41. The blue chip index danced around the 14,000 mark during the session, having first reached it on Tuesday but not closing above that level until Thursday. The Dow’s close topped the previous record of 13,971.55 set Tuesday and marked the index’s 32nd record close of the year.
Broader stock indicators also gained Thursday. The S&P 500 rose 6.91, or 0.45 percent, to 1,553.08; its previous record of 1,552.50 occurred Friday. The technology-focused Nasdaq composite index rose 20.55, or 0.76 percent, to 2,720.04, following the upbeat tech earnings.
Though stocks briefly shed some gains after newly released minutes from the Federal Reserve’s last meeting appeared to confirm that the central bank has no plans to cut rates anytime soon, investors resumed buying in short order.
Bonds showed little overall movement. The yield on the benchmark 10-year Treasury note was flat at 5.03 percent from late Wednesday. The dollar was mixed against other major currencies, while gold prices rose.
The stock market’s rise came even as oil moved higher. Light, sweet crude settled up 87 cents at $75.92 per barrel on the New York Mercantile Exchange after briefly touching $76 for the first time in 11 months.
Thursday’s gains extended a partial recovery that started late in Wednesday’s session, when the Dow pulled itself up from a loss of 134 points to end with only a 53-point deficit. Stocks had ceded ground Wednesday amid uneasiness about Bernanke’s assessment of the economy, though analysts subsequently noted there was little new in his comments.
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