Wall Street surges to five-year highs; Dow ends above 14,000

NEW YORK Fri Feb 1, 2013 5:36pm EST

1 of 2. Traders work on the floor of the New York Stock Exchange, January 23, 2013.

Credit: Reuters/Brendan McDermid

NEW YORK (Reuters) - Stocks rose to five-year highs on Friday, with the Dow closing above 14,000 for the first time since October 2007, after jobs and manufacturing data showed the economy's recovery remains on track.

The S&P touched its highest since December 2007 after a 5 percent gain in January, which was its best start to a year since 1997. The index is now just about 60 points away from its all-time intraday high of 1,576.09.

Employment grew modestly in January, with 157,000 jobs added. That was slightly below expectations, but Labor Department revisions showed 127,000 more jobs were created in November and December than previously reported.

Analysts attributed the market's robust showing so far this year partly to a deluge of cash flowing into equities.

Investors poured $12.7 billion into U.S.-based stock mutual funds and exchange-traded funds in the latest week, concluding the strongest four-week flows into stock funds since 1996, data showed on Thursday.

"There is a lot of money looking for a home, and people are finally deciding the bond market is done and moving money into equities," said Edward Simmons, managing director and partner at HighTower in Portland, Maine.

"I see the rotation (of assets) pushing the market up in the face of not-massive amounts of good news," he said. "People are overlooking the higher risk in equities."

Other reports released Friday showed the pace of growth in the U.S. manufacturing sector picked up in January to its highest level in nine months, U.S. consumer sentiment rose more than expected last month, while December construction spending also beat forecasts.

"All the data seems to keep pointing to a slowly, steadily improving economy," said Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago.

The Dow Jones industrial average .DJI was up 149.21 points, or 1.08 percent, at 14,009.79. The Standard & Poor's 500 Index .SPX was up 15.06 points, or 1.01 percent, at 1,513.17. The Nasdaq Composite Index .IXIC was up 36.97 points, or 1.18 percent, at 3,179.10.

With the day's gains, major equity indexes rose five straight weeks.

More than 600 stocks on the NYSE and the Nasdaq combined hit 52-week highs on Friday, including Google GOOG.O. which rose as high as $776.60, before closing at $775.60, up 2.6 percent.

Investors were also attuned to corporate earnings, with a trio of Dow components reporting profits that beat expectations.

Exxon Mobil (XOM.N) ended flat at $90.04 after reporting results while Chevron (CVX.N) added 1.2 percent to $116.50.

Drugmaker Merck & Co (MRK.N) fell 3.3 percent to $41.83 after a cautious 2013 outlook.

Generic drugmaker Perrigo PRGO.O reported a better-than-expected second-quarter profit and its shares jumped 4.7 percent to $105.28.

Of the 252 companies in the S&P 500 that have reported earnings so far, 69 percent have exceeded expectations, according to Thomson Reuters data. That is a higher proportion than over the past four quarters and above average since 1994.

Overall, S&P 500 fourth-quarter earnings are estimated to have grown 4.4 percent, according to the data, up from a 1.9 percent forecast at the start of the earnings season but well below a 9.9 percent profit growth forecast on October 1.

Dell Inc DELL.O gained 2.9 percent to $13.63 after sources said the company was nearing an agreement to sell itself to a buyout consortium led by its founder, Michael Dell, and private equity firm Silver Lake Partners.

(Reporting By Angela Moon; Editing by Kenneth Barry)

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Comments (9)
Harry079 wrote:
“as jobs and manufacturing data pointed to a stronger U.S. economy.”

Where would it be pointing without the $85 billion a month Fed pumping?

Due South?

Feb 01, 2013 10:41am EST  --  Report as abuse
mikemm wrote:
The stock market has historically peformed better under Democratic presidents. This time is no exception. It sounds counter-intuitive to many people, but it never the less tends to be true.

Feb 01, 2013 11:14am EST  --  Report as abuse
You don’t have to be a rocket scientist or Nobel prize-winning economist to know there is a total disconnect between the economy and the stock market. One no longer has anything to do with the other, quite obviously. The dynamics of the market have completely changed. I agree with the ‘experts’ who say the market surge just reflects the movement of all the cash that has been sitting on the sidelines. The rise in the market can be explained in very narrow terms. In the meantime, we had a economic contractionand unemployment is up. It makes sense to make a buck while you can, but it is essential you understand the reasons for this rally.

Feb 01, 2013 11:58am EST  --  Report as abuse
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