Investor Confidence Keeps Dow Near 4-Year High

By REUTERS
Published: February 8, 2012

Stocks closed flat in a thinly traded session on Wednesday as Greece remained at a standstill over accepting reforms in exchange for a bailout crucial to avoiding a default.

Underlying confidence kept the Dow Jones industrial average near an almost four-year high reached on Tuesday, though trading has been quiet since last week’s stellar employment report. The Standard & Poor’s 500-stock index and the Nasdaq are both up 0.3 percent so far this week while the Dow is about unchanged.

Greek party leaders gathered on Wednesday to consider reforms demanded by the European Union and the International Monetary Fund after delays.

“We would take a hit if Greece is unable to come to a deal, but lately we’ve been decoupling from Europe as markets catch up to how strong the economy appears to be,” Randy Frederick, director of trading for Charles Schwab in Austin, Tex., said.

The Walt Disney Company, a Dow component, rose 0.7 percent to $41.27 a day after it reported quarterly profit that topped expectations.

Of the 315 companies in the S. & P. 500 that have reported earnings to date, 61 percent have come in above analysts’ expectations, a rate below that of previous quarters.

Cisco Systems, another Dow component and a bellwether for the networking industry, rose 2.4 percent to $20.93 in extended trading after reporting adjusted second-quarter earnings that beat expectations. Shares of Groupon, the daily deal company, fell 7.6 percent to $22.70 after the bell when it unexpectedly posted an adjusted quarterly loss, even as revenue almost tripled from the prior year.

The Dow rose 5.75 points, or 0.04 percent, to 12,883.95. The S. & P. 500 was up 2.91 points, or 0.22 percent, at 1,349.96. The Nasdaq composite index was up 11.78 points, or 0.41 percent, at 2,915.86.

The Dow had its highest close on Tuesday since May 2008; stocks have rallied from late last year on central bank action and signs of an improving economy.

On Wednesday, some prominent players raised eyebrows with their endorsement of stocks.

Laurence D. Fink, chief executive of BlackRock, the world’s largest money manager, told Bloomberg Television that investors should be 100 percent in stocks.

That followed bullish comments from the staff of the renowned market bear Nouriel Roubini. Gina Sanchez, Mr. Roubini’s director of equity and allocation strategy, told CNBC that the rally “has some legs.”

The Dow has gained 21 percent since early October and has retraced more than 80 percent of its bear market slide from 2007 to early 2009. The blue-chip index is now about 10 percent away from the all-time high it hit in October 2007, while the S. & P. and Nasdaq are both on track for a sixth week of gains.

The speed and magnitude of the gains have some suggesting a pullback could be imminent. While major indexes are slightly higher for the week, the CBOE Volatility index, which is considered a gauge of investor fear and generally moves inversely to the S. & P., has risen 6.3 percent.

Polo Ralph Lauren, the clothing maker, surged 9.2 percent to $171.49 after reporting better-than-expected results for the holiday quarter.

Energy shares were the biggest decliners, as Brent and crude oil futures in the United States pared gains after a report showed a buildup in crude inventories in the United States. The S. & P. energy index fell 0.5 percent. Exxon Mobil was one of the biggest losers on the Dow, falling 0.6 percent to $85.32.

Interest rates were steady. The Treasury’s benchmark 10-year note fell 2/32, to 100 5/32, and the yield was unchanged at 1.98 percent.

http://www.nytimes.com/2012/02/09/bu...-activity.html