February 22, 2012
It came and went in a flash, but its symbolic power couldn’t be dismissed.
The Dow Jones industrial average, powered higher all year by optimism the economic recovery is finally for real, crossed 13,000 Tuesday for the first time since May 2008.
The last time the Dow occupied such rarefied territory, unemployment was a healthy 5.4 percent, and Lehman Brothers was a solvent investment bank.
The milestone Tuesday came about two hours into the trading day.
The Dow was above 13,000 for about 30 seconds, then slightly longer about 11 a.m. and 12:30 p.m., but couldn’t hold its gains. It finished up 15.82 points at 12,965.69.
Still, Wall Street took note of the marker.
It was just last summer that the Dow unburdened itself of 2,000 points in three terrifying weeks. S&P downgraded the U.S. credit rating, Washington was fighting over the federal borrowing limit and the European debt crisis was raging.
A second recession in the U.S. was a real fear. But the economy grew faster every quarter last year, and gains in the job market have been impressive, including 243,000 jobs added in January alone.
“Essentially over the last couple of months you’ve taken the two biggest fears off the table, that Europe is going to melt down and that we’re going to have another recession here,” said Scott Brown, chief economist for Raymond James.
The tumult of last summer and fall left the Dow as low as 10,655. Its close Tuesday put it 22 percent above that low.
A long-awaited deal to cut the debt of Greece and prevent a potentially catastrophic default, announced before dawn in Europe after 12 hours of talks, helped the Dow clear 13,000.
Under the bailout deal, Greece will get about $172 billion from other European nations and the International Monetary Fund.
After months in which talks crawled along and vague headlines yanked the market up and down, the conclusion was almost anticlimactic because the markets were already expecting an agreement.
European markets didn’t take the news as well. Stocks closed down 3.5 percent in Greece, where stocks have lost 80 percent of their value since 2007. Stocks declined less than 1 percent Tuesday in Germany, France and Britain.
Investors noted Greece remains in deep recession. Its bond investors will take a 53.5 percent loss on the face value of their bonds, which could discourage future investment.
In the U.S., investors were cheered by earnings from Home Depot, watched closely as a barometer of American spending on homes, and Macy’s.
The Dow has climbed 6 percent this year and has not lost 100 points on any day. The Greek debt crisis may be receding, but high gasoline prices are emerging as a threat to the economic recovery and stock market.
A gallon of regular gas costs $3.57 on average, the highest on record for this time of year. The price of oil settled at $106.25, up $2.65 for the day and its highest level since May.