Dow closes above 14,000 for first time in five years

U.S. jobless rate rises to 7.9 percent

  • Follow Business

NEW YORK — The Dow closed above 14,000 on Friday for the first time in more than five years, pushed over the mark by strong auto sales and optimism about U.S. job growth.

A Labor Department report issued Friday said employers added 157,000 jobs in January. Unemployment inched up to 7.9 percent from 7.8 percent in December. Many economists, though, were encouraged because the government now says hiring over the past year was higher than originally thought.

The Labor Department’s estimated job gains for the final two months of 2012 – a period when the economy was being threatened by the “fiscal cliff” – rose from 161,000 to 247,000 for November and from 155,000 to 196,000 for December.

The monthly job gains are derived from a survey of employers, while the unemployment measurement comes from a survey of households.

The hiring picture over the past two years also looked stronger after the department’s annual revisions, which showed employers added an average of roughly 180,000 jobs a month in 2012 and 2011. That was up from previous estimates of about 150,000.

Also on Friday, the auto industry reported its best January since 2008. U.S. auto sales rose 14 percent to more than 1 million. Toyota’s 27 percent gain was the biggest among the major car companies. Ford’s sales jumped 22 percent, while GM and Chrysler each reported 16 percent gains compared with a year earlier.

The Dow Jones industrial average had been rising fairly steadily for about a month. It is now just 155 points away from its record close.

But market watchers were divided over what the milestone means. To some, it’s an important booster to hearts and minds.

“The Dow touching 14,000, it matters psychologically,” said Peter Cardillo, the chief market economist at Rockwell Global Capital in New York. “It attracts smaller investors.”

And those investors, until recently, had been shying away from stocks. Since April 2011, investors have pulled more cash out of U.S. stock mutual funds than they’ve put in, according to the Investment Company Institute. In the past three weeks, though, that trend has reversed.

To others, though, Dow 14,000 is nothing but a number, a sign more of how traders feel than of the economy. And it’s not even the best number on the board, some traders say.

Joe Gordon, the managing partner at Gordon Asset Management in North Carolina, wasn’t celebrating Friday. He thinks the gains won’t last.

“It is good trivia to talk about on television and the radio,” Gordon said. “It’s meaningless to the average professional.” And for workers still unemployed by the financial crisis, he said, “it really means nothing to them.”

If there is dissent over what Dow 14,000 signifies, what’s undeniable is that it’s a rarefied event. Before Friday, the Dow had closed above 14,000 just nine times in its history. The first time was in July 2007; the rest were in October of that year.

The last time the Dow closed that mark was Oct. 12, 2007, when it settled at 14,093.08. It had reached its all-time record, 14,164.53, three days before that.

For the average investor, that was all back when the stock market still seemed like a party. Housing prices were starting to ebb but hadn’t cratered. Jobs were abundant, with unemployment at 4.7 percent – compared to 7.9 percent now. Lehman Brothers still existed. So did Bear Stearns, Wachovia and Washington Mutual.


Top headlines

Commissioners call off search for administrator

Augusta government remains under the direction of two interim city administrators after city commissioners failed to agree to support either of two finalists for the job named by Mayor Deke ...
Search Augusta jobs