Stock indexes close up for six straight weeks of gains
NEW YORK -- Stocks closed higher Friday, although in a tight trading range. For the Dow Jones industrial average and the Standard & Poor's 500 index, it was the sixth straight week of gains, which hasn't happened since late 2011. The Nasdaq composite index finished higher for the fifth straight week.
Driving stocks higher was rising consumer sentiment in August, robust retailer earnings, and a report showing the Conference Board's index of leading indicators rose in July.
The Dow closed up 25.09 points, 0.2%, to 13,275.20. The S&P 500 closed up 2.65 points, 0.2%, to 1,418.16. and the tech-heavy Nasdaq ended up 14.20 points, 0.5%, to 3,076.59.
Two stocks of note: Facebook's stock fell to $19 for the first time on Friday, meaning it has lost half its market value since the company's initial public offering in May.
Meantime, Apple stock hit a new record, closing up $11.46, or 1.8%, to $647.80, becoming the world's most valuable company. The previous high for the stock was $644, hit on April 10.
Driving stocks higher was earnings and some positive economic news. The University of Michigan-Thomson Reuters index, a monthly measure of how consumers feel about their personal finances as well as business and buying conditions in the economy, rose to 73.6 from a July reading of 72.3, according to a report from the index producers. Economists had been expecting the index to decline because of economic uncertainty.
Investors were especially pleased with retailer earnings, including Gap, which boosted its outlook and posted a 29% jump in net income, suggesting the operator of Gap and Old Navy stores is finally on the way to a turnaround.
After coming within a few points of a new bull market high in Thursday's session, Wall Street will be wondering in coming weeks when the Dow Jones industrial average and the broader Standard & Poor's 500 index might build up enough steam to sail past the highs hit earlier in the year and get back to levels last seen more than four years ago.
The Dow closed yesterday at 13,250.11 and is within 29 points of a new 2012 high. If it can take out its May 1 high of 13,279.32, it would mark its highest level since the 2008-09 financial crisis and December 2007.
Similarly, the S&P 500 is also on the precipice of a multiyear high. It closed Thursday at 1415.51, less than four points shy of its April 2 high of 1419.04. If the benchmark index can take out its prior 2012 high, it would be its highest level since May 2008.
The Nasdaq composite index has been doing very well so far this year, it's up nearly 18% year-to-date. However, if the Nasdaq broke through highs set earlier this year, any gains from there would break levels not seen since the Internet bubble in 2000.
In the U.S., a new post-financial crisis high would be a psychological boost to investors and demonstrate the market's resilience under tough conditions, says Mark Luschini, chief investment strategist at Janney Montgomery Scott.
"It's evidence that the recovery in the economy, which many investors don't think has occurred fully, is real, and stocks reflect it," Luschini says. "It might also spark an interest from investors that have been wary of stocks. Hitting a post-crisis high is a tangible demonstration that the market is resilient, that it came back, that investments recover even from brutal declines, and that a patient investor can make money in stocks."
The market still has a long way to go before hitting a new all-time high, however. The S&P 500 remains more than 9% below its record close of 1565.15 hit on October 9, 2007. And the Dow remains more than 900 points shy of its 2007 peak of 14,164.53.
Overseas, European stocks rose in early trading. Britain's FTSE 100 gained 0.1% to 5,843 while Germany's DAX was 0.4% higher at 7,019 and France's CAC-40 was up 0.25% at 3,481. In the Netherlands, the AEX index rose 0.7% to hit a year-high of 336.
While visiting Canada, Germany Chancellor Angela Merkel repeated her commitment to doing whatever is needed to preserve the euro. In addition, German July producer prices came in lower at 0.4% versus expectations of 0.9% year on year — potentially giving ammunition to those who argue the European Central Bank could further ease monetary policy if it wishes.
The 17 countries that use the euro have been struggling for the past three years to cope with huge debts and recession. Spain and Italy, the two big trouble spots, are threatened with a financial collapse that could tear the 13-year-old currency union apart and rock the global economy.
The immediate flashpoint may be Greece, which is hoping for more lenient terms on its most recent bailout package.
Rabobank fixed income analyst Richard McGuire noted that Greece is facing a bond repayment on Aug. 20, and that a ruling by Germany's constitutional court on the legality of one of Europe's bailout funds and national elections in the Netherlands are both coming on Sept. 12. He said the possible outcomes of these events are beginning to creep into investors' calculations.
Stocks in Asia registered broad gains. Japan's Nikkei 225 index rose 0.8% to close at 9,162.50 — its highest finish in more than three months, as the government forecast the country will soon emerge from its 15-year battle with deflation. Hong Kong's Hang Seng added 0.8% to 20,116.07 and Australia's S&P/ASX 200 gained 0.9% to 4,370.10.
Analysts were skeptical about Tokyo's optimism.
"I think the main thing coming out of the macro side is that It looks like the U.S. economy is growing, albeit slowly," said Lorraine Tan, director at S&P's equity research in Singapore.
South Korea's Kospi fell by 0.6% to 1,946.54. Mainland Chinese shares were mixed. The Shanghai Composite Index gained 0.1% to 2,114.89. The Shenzhen Composite Index lost 0.3% to 876.93.
Crude oil futures were down 20 cents to $95.40 per barrel on the New York Mercantile Exchange, following a strong rise Thursday.
In currencies, the euro fell to $1.2323 from $1.2362 late Thursday in New York. The dollar rose to 79.47 yen from 79.25 yen.
Contributing: The Associated Press