Greece Deal Boosts U.S. Stocks to Highest Level Since 2008
The Dow Jones industrial average hit 13,000 for the first time since May 2008.
Feb. 21, 2012— -- The Dow Jones industrial average closed higher today after hitting the intraday high of 13,000 for the first time since May 2008. The stock index is at a nearly four-year high, closing just below 13,000.
The Dow closed at 12,967, up 0.13 percent, while the S&P 500 closed at 1,362, up 0.08 percent.
Paul Larson, chief equities strategist for investment firm Morningstar, said the 13,000 mark is an arbitrary number without much intrinsic value to the markets. Still, it is twice the intraday market low of 6,440 at the height of the recession March 9, 2009.
The Dow opened this morning at 12,980 while the S&P 500 opened to 1,364, which was that index's highest close since 2008. The Dow Jones industrial average closed Friday at 12,950, up 0.35 percent, and the S&P 500 closed at 1,361.
With European finance ministers agreeing to a new bailout package for Greece, all eyes were watching whether the Dow would pass the psychological threshold of 13,000 after markets were closed Monday in honor of Presidents Day. The index briefly passed the mark shortly before 11:30 a.m. ET before returning to about 12,995.
"There's nothing magical about the 13,000 level, but it could help boost investor sentiment to some extent," Scott Brown, an economist with Raymond James, said. But, he added, "it's encouraging that the market is absorbing bad news on Walmart and second-guessing on the Greek bailout."
Larson said the Greek deal did not provide as much positive "pop" to shares as might be expected because the solvency issue in Greece is far from over.
"You don't solve a debt problem with more debt," Larson said. "Maybe the immediate crisis of the country going through a disorderly default next month has been diverted, but that doesn't mean long-term issues have been solved.
Early this morning, eurozone finance ministers finished seven months of deliberating in Brussels and agreed to a bailout plan for Greece of 130 billion euros, or about $171.5 billion, its second in three years. Martin Koehring, an economist for the Economist Intelligence Unit, said that without the bailout, Greece faced the prospect of defaulting on a 14.5 billion euro, or about $19.1 billion, bond redemption due by March 20.
"If we get a resolution or even improvement as far as Greece and stress in the financial markets is concerned, that could boost some of the gains we're seeing in the stock markets," Nick Bennenbroek, head of currency strategy for Wells Fargo, said before the deal.
In the United States, Home Depot announced strong fourth-quarter earnings, including $774 million in net income, a 32 percent increase. Kraft reported fourth-quarter net income of $830 million, up from $540 million, in line with expectations.
Walmart, however, reported a 15 percent drop in profit for the fourth quarter to $5.16 billion, missing estimates.
European shares were slightly this morning after seeing their highest close Monday in almost seven months.
In London, the FTSE 100 index was up 0.68 percent at 5,945, after an earlier drop. Asian shares finished mixed before the Greek deal had been reached. Japan's Nikkei 225 index closed down 0.2 percent at 9,463, and Hong Kong's Hang Seng rose 0.3 percent to 21,479.
European equities were lower partly on "buy the rumor, sell the news," Brown said. He said shares were also down after a Financial Times report of a confidential European Union memo that questioned Greece's ability to service its restructured debt.
