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Saturday, February 2, 2013

WALL STREET : Dow Breaks 14,000 for First Time in 5 Years

U.S. stocks rally; Dow industrials top 14K
It’s taken nearly 2,000 days and countless migraines, but the Dow Industrials have finally recaptured the 14000 threshold.

Friday was all about jobs and the magical 14K level. For the first time in more than five years, the Dow Jones Industrial Average (DJIA) finished above the mark it has been chasing in recent weeks. It got there with a push from a jobs report that may not have looked strong on the surface, but showed there was more job creation in the U.S. during the final two months of 2012 than originally thought. Friday also marked the fourth-straight week of increases for most of the major indices.

The Dow Jones Industrial Average rose 149.21 points, or 1.08%, to 14,009.79, its first finish above the 14,000 level since Oct. 12, 2007. Up 0.8% from the week-ago close, the blue chip index’s weekly win run was its longest running since August. 
S&P 500 index gained 15.06 points, or 1.01%, to 1,513.17, posting a 0.7% weekly advance, with telecommunications leading the gains among its 10 major industry groups.

The Nasdaq Composite added 36.97 points, or 1.18%, to 3,179.09, up 0.9% from last Friday’s finish.
CBOE Volatility Index (VIX) finished at 12.90, down a little more than a point, or 9.66%. The VIX broke its four-day streak of finishing north of 13. Friday's downturn pushed the VIX into negative territory for the week, as it fell 0.08%.

For every stock falling nearly four rose on the New York Stock Exchange, where almost 757 million shares traded. Composite volume approached 3.9 billion.

"Everyone was so concerned about the fiscal cliff, yet we had some really strong hiring in the private sector during those months. The Dow’s reaching 14,000 is another positive sign after finishing one of the strongest months on record."

"Friday’s rally followed a solid month for equities, with the S&P 500 gaining 5% in January, which also marked the first full month since 2007 where more money flowed into equity funds than bond funds."

"The significantly stronger payroll gains tell us the economy has a lot more momentum than what we had thought. Beyond the job market, the economy is showing other signs of health. Factories were busier last month than they have been since April 2012. Ford, Chrysler and General Motors all reported double-digit sales gains for last month, their best January in five years."

"Some economists had feared that federal budget standoffs might chill spending, investing and hiring. They worried that companies wouldn't hire and consumers would scale back spending in November and December because big spending cuts and tax increases were to take effect Jan. 1 if the White House and congressional Republicans couldn't reach a budget deal. 
It turns out, the fears were overblown. In the midst of the budget fight late last year, employers kept hiring."

"U.S. markets aren't the only ones in a major rally: The Japanese Nikkei 225 stock index has risen in each of the last 12 weeks, something that hasn't happened since 1959."
“With sentiment running high, investors who can afford to be a little more patient by adding equities in a measured way will be rewarded over the course of the full year. This could turn into a very good year but it’s probably not going to do it all in February.” 

"Many believe the recent surge of equity inflows could be a bearish sign, especially since ordinary investors tend to lag behind so-called “smart money.” EPFR data showing equity inflows of $18.8 billion this week triggers a “sell signal from our contrarian global flow trading rule.” The last sell signal back in January 2011 was followed by an 8% correction a few weeks later. On average, the signal precedes a 5% correction in global equities over the subsequent four to five weeks."


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