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UPDATE: Dow surges to record ... and keeps going

Posted: March 6, 2013 10:00 a.m.
Updated: March 6, 2013 10:09 a.m.
Trader Peter Tuchman smiles as he works on the floor of the New York Stock Exchange Tuesday. Trader Peter Tuchman smiles as he works on the floor of the New York Stock Exchange Tuesday.
Trader Peter Tuchman smiles as he works on the floor of the New York Stock Exchange Tuesday.

NEW YORK (AP) — An encouraging job-market report helped nudge the stock market higher Wednesday, a day after the Dow Jones industrial average tore through its previous record high.

The Dow was up 14 points, or 0.1 percent, to 14,268 shortly after noon.

Companies added 198,000 workers to their payrolls in February, according to payment processor ADP. The survey also revised the previous month's numbers up: ADP says employers added 23,000 more jobs in January than first reported.

In other trading, the Standard & Poor's 500 index was down one point, or 0.1 percent, to 1,538. The Nasdaq slipped six points, or 0.2 percent, to 3,218.

The Dow closed Tuesday at 14,253.77, clearing the previous closing record by almost 90 points. The index of 30 big corporations has more than doubled since hitting a low during the financial crisis in March 2009.

In the past, stock indexes have often drifted lower in the months after breaking through previous record highs. David Brown, director of Sabrient Systems, an investment research firm, sees plenty of reasons for the market to keep climbing, however. People are putting their savings into the stock market again. And the alternatives, like bonds, are hardly appealing.

"There is literally nowhere else to go," Brown said. "Do you really want to make 1.9 percent on a 10-year Treasury? You won't make any money doing that."

Microsoft dropped 1 percent. European regulators fined the company for failing to follow an antitrust agreement requiring Microsoft to offer computer users a choice of Internet browsers, instead of just Internet Explorer.

The ADP survey suggests that looming government spending cuts have yet to deter employers from hiring. Investors look to the ADP survey as a preview to the closely watched Labor Department report, which comes out Friday. Economists expect employers added 152,000 jobs in February, lowering the unemployment rate to 7.8 percent from 7.9 percent.

The ADP report also drove yields up in the bond market, as traders began anticipating a better monthly jobs report from the government on Friday. The yield on the 10-year Treasury rose to 1.93 percent from 1.90 percent late Tuesday.

Expectations of a stronger economy tend to lure traders out of Treasurys and into other investments that rise with economic growth, like stocks.

Over the long haul, stock markets climb higher, but the path is rarely smooth. In October 2007, the Dow hit its previous high of 14,164. A year later the country was in the middle of a financial crisis and the Dow was in free fall. In January 1987, the Dow closed above 2,000 for the first time. That October the Dow plunged 23 percent on Black Monday.

That hardly means the market is about to plunge. Besides the relatively poor returns offered by bonds, analysts point to other reasons the stock market could continue to rise: the economy is slowly recovering, interest rates and inflation are low, and stocks are not especially expensive. Stocks in the Dow index currently trade for 15 times their per-share earnings, in line with their historical average.

Among other companies making big moves:

— Staples sank 7 percent after the office-supply chain posted a 72 percent drop in quarterly earnings, which were hit by charges from closing stores. Staples also warned of weaker sales growth this year. Its stock dropped 82 cents to $12.47.

— Strong quarterly profits propelled Big Lots up 6 percent. The discount store posted better earnings than analysts had projected, with the help of soaring sales in Canada. Its stock rose $2 to $35.89.

— American Eagle Outfitters fell 11 percent after the clothing retailer reported earnings that fell short of analysts' estimates. Its quarterly earnings forecast also fell short. Its stock dropped $2.48 to $20.07.

Copyright 2013 The Associated Press.



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