NEW YORK – The stock market closed at a new 18-month high Friday, with the Dow Jones industrial average briefly touching 11,000 before retreating slightly.
The gains were driven by fresh signs that the economy continues to recover. Many analysts remain skeptical that the market's gains are sustainable since they have come on relatively low volume, indicating that a large number of investors are still sitting on the sidelines.
The Dow very briefly touched 11,000 in the final five minutes of trading before ending with a gain of 70 points. It hadn't crossed that level since Sept. 29, 2008, just as the worst phase of the financial crisis was beginning.
Stocks got a boost after reassuring statements from Greece's finance minister and the head of the European Central Bank. Major European indexes closed higher, while the dollar fell against the euro.
Major indexes pulled back briefly after Fitch Ratings cut its view on Greece's debt, but quickly recovered. Stocks have been fluctuating in recent days and the euro has weakened because of concerns that Greece might default on its debt.
Greece's deepening fiscal crisis has upset other financial markets and caused concerns that other weak European countries also might default on their debt, which could cause a crisis for Europe's shared currency.
"If (Greece) falls apart, it makes everything else there fall apart," Chip Cobb, a senior vice president at Bryn Mawr Trust Asset Management in Bryn Mawr, Pa. "Greece is becoming a real thorn in the side."
Rising commodity prices also helped energy and material stocks, pushing indexes higher. Commodities mostly climbed on hopes demand will jump as the economy continues to improve. Chevron Corp. and ExxonMobil Corp. both rose.
The Dow Jones industrial average crept toward 11,000 throughout the day, having come within 12 points of that barrier on both Monday and Tuesday before closing lower.
While the Dow's approach to 11,000 has been a big focus for many individual investors, a number of Wall Street analysts downplay its importance for professional money managers. The Dow has crossed the 11,000 level 34 times since first hitting it in May of 1999.
"Round numbers are always psychologically significant," but rarely do they represent a technical milestone such as an index breaking out of a recent trading range, said Uri Landesman, head of global growth at ING Investment Management in New York.
The Dow rose 70.28, or 0.6 percent, to close at 10,997.35. The Standard & Poor's 500 index climbed 7.93, or 0.7 percent, to 1,194.37. The Nasdaq composite index rose 17.24, or 0.7 percent, to 2,454.05.
The Dow's rise Friday gives the index its sixth straight weekly gain for the first time since a stretch in March and April last year, just after market bottomed out at 12-year lows. The Dow started the day at exactly the same level it closed last week.
The Dow Jones industrial average is now up 68 percent from a 12-year low of 6,547.05 on March 9, 2009. It's still down 22 percent from its October 2007 peak of 14,164.53.
A report on wholesale inventories Friday provided the latest positive sign on the economy. The Commerce Department said inventories rose 0.6 percent in February, better than the 0.4 percent forecast by economists polled by Thomson Reuters.
Sales at wholesalers also rose faster than expected, gaining 0.8 percent. It was the 11th straight month of rising sales. Economists had forecast a 0.5 percent rise.
Consistently rising inventories and sales at the wholesale level mean that manufacturers are getting steady orders that should allow them to hire more workers. It also means retailers are ramping up orders as consumers return to stores after curtailing their spending during the recession.
The start of earnings reports could give the Dow the push it needs to close above 11,000 if investors see companies continuing to increase profits. Reports are expected next week from Aloca Inc., as well as JPMorgan Chase & Co. and Bank of America Corp. Traders will also have plenty of economic data to digest, including March retail sales Wednesday and housing starts Friday.
Advancing stocks narrowly outpaced those that fell two to one on the New York Stock Exchange, where consolidated volume came to 4.4 billion shares, compared with 4.8 billion shares Thursday.
Benchmark crude for May delivery pulled back from morning highs to close down 47 cents at $84.92 a barrel.
Chevron jumped $1.84, or 2.4 percent, to close at $79.50, while ExxonMobil rose 90 cents to $68.76. J.C. Penney climbed 54 cents to $31.52.
Bond prices edged up. The yield on the 10-year Treasury note fell to 3.88 percent from 3.89 percent late Thursday.
The Russell 2000 index of smaller companies rose 3.31, or 0.5 percent, to 702.95.
Britain's FTSE 100 gained 1 percent, Germany's DAX index rose 1.3 percent, and France's CAC-40 jumped 1.8 percent. Japan's Nikkei stock average rose 0.3 percent.
The Dow Jones industrial average closed the week up 70.28 points, or 0.6 percent, at 10,997.35. The Standard & Poor's 500 index rose 16.27, or 1.4 percent, to 1,194.37. The Nasdaq composite index rose 51.47, or 2.1 percent, to 2,454.05.
The Russell 2000 index, which tracks the performance of small company stocks, rose 18.97, or 2.8 percent, for the week to 702.95.
The Dow Jones U.S. Total Stock Market Index — which measures nearly all U.S.-based companies — ended at 12,316.03, up 191.63, or 1.6 percent for the week.
The Index is up 81 percent — about $6.3 trillion in market capitalization — from a 12 1/2-year low of 6800.08 on March 9, 2009. It's still down nearly 22 percent — or about $4.8 trillion in value — from its October 2007 peak of 15,745.39.
Augstums reported from Charlotte, N.C.
NEW YORK – Think Dow 11,000 is a big deal? Think again.
The Dow Jones industrial average briefly hit the milestone Friday for the first time in 18 months before closing at 10,997.
But Wall Street analysts who study key stock index levels say all the attention paid to 11,000 is more like a big distraction. They worry that investors are ignoring another number at their peril: The surprisingly low volume of trading. As stocks have risen over the past year, the volume reflects the vulnerability of a rally riding on the shoulders of relatively few participants.
And that's given pause even to the bulls.
"It worries a lot of us," says Wellington Shields' Frank Gretz, a technical analyst who specializes in pinpointing market levels at which stocks might suddenly rise or fall. He wonders whether the volume signals that the rally could soon peter out, like the big surges that preceded steep declines in the 1930s in the U.S. and in Japan more recently.
Louise Yamada, a 29-year veteran of technical analysis who heads an eponymous firm in New York, says she's not just concerned but confused.
"Why is the market going up?" she asks. "You usually don't see advances without volume."
The widely cited Dow index, which tracks stocks of 30 companies, is up 70 percent from its lows of more than a year ago. The climb has been one of the strongest in history, and it may herald a strong recovery. But it's been propelled by relatively few trades.
The 200-day moving average volume on the New York Stock Exchange is now at 1.2 billion shares, down from 1.6 billion, or nearly 25 percent, a year ago.
In other words, if there is wisdom in crowds, the stock market is getting dumber.
One reason volume is lower: Main Street investors have largely stayed out of the market, abandoning it to hedge funds, pension funds and other professional investors. Last year, individuals, as tracked by mutual fund flows, yanked $14 billion from stock mutual funds.
Bulls argue that the Dow breaching 11,000 might convince ordinary investors that the rally will last. And that will bring a flood of money into the market, pushing indexes higher.
But Janney Montgomery Scott analyst Dan Wantrobski isn't convinced.
"Main Street investors need confidence in the economy more than the Dow at 11,000," he says. "They need a drop in the unemployment rate."
On that front, there are signs of hope.
Last week the Labor Department reported 162,000 jobs were created in March, the most in three years. The unemployment rate was unchanged, at 9.7 percent.
Another boost to the outlook came Thursday from retailers: Sales at stores open at least a year rose 9 percent last month.
And, of course, there are plenty of other indicators of stock market health besides volume.
Technical analysts will make your head dizzy with their talk of "double tops," "double bottoms" and "Fibonacci retracements." Some of them prefer to make the case for a bull market.
For starters, they like that most stocks in various indexes have rallied, and not just a few powerful ones, as is sometimes the case. They also note that nearly nine out of 10 stocks are trading above their 200-day average price — a bullish sign.
Then there's the argument that maybe volume isn't really all it's cracked up to be.
In the last bull market, the trend was completely opposite the one today. The 200-day average daily volume surged to 1.7 billion shares in late 2007, up more than a third from early 2002, as individuals grew more confident in the rally.
As it turns out, they should have sat on their cash. In October 2007, shortly after volume peaked, the market began to collapse. Investors will still be down 22 percent — even if the Dow does eventually close above 11,000.
JULIAN, W.Va. – Massey Energy says it's going to conduct extensive reviews of an explosion that killed 25 people at a West Virginia coal mine.
Massey said Friday in a statement that its aim is to prevent similar explosions. The statement also responds to criticisms about the safety record of the Upper Big Branch mine where the blast occurred. The mine has been cited for numerous violations of federal mining rules.
Massey says it does not condone any violation. The company also says the mine has less than one federal violation per day, which is about the national average.
The firm says most violations are resolved the day they are issued.
Massey maintains its safety record has been better than the industry average for 17 of the past 19 years.