Dow surges toward 13,000 as pound holds above $2

Stocks bounded higher Friday, hurtling the Dow Jones industrial average to a record close approaching 13,000 as investors celebrated a week of surprisingly strong earnings reports.

By AP
April 22, 2007 08:21
4 minute read.

SHARES WALL STREET Stocks bounded higher Friday, hurtling the Dow Jones industrial average to a record close approaching 13,000 as investors celebrated a week of surprisingly strong earnings reports. The major indexes all had their third straight winning week, their longest such streak since October. So far into the earnings season, 16 of the 30 Dow components have posted financial results for the first three months of the year - with 10 surpassing analyst forecasts. Better-than-expected results allowed stocks to extend their best April rally in four years, and one that pushed the Nasdaq composite index and the Standard & Poor's 500 index to six-year highs. "It's not a matter of 13,000 for the Dow, we could be looking at 14,000 by the end of the year," said Robert Froehlich, chief investment strategist for investment firm DWS Scudder. "There's too much money out there chasing too few companies. This story isn't ending anytime soon." The Dow Jones Industrials Average closed up 153.35, or 1.20 percent, at 12,961.98, after setting a new intraday high of 12,966.29. The blue chip index has hit 34 record closes since the beginning of October. The S&P 500 index soared 13.62, or 0.93%, to 1,484.35, and the Nasdaq rose 21.04, or 0.84%, to 2,526.39. The Nasdaq, badly beaten down since its peak of 5,048.62 in early 2000, now stands at just over 50% of that record. For the week, the Dow surged 2.8%, the S&P 500 added 2.2%, and the Nasdaq rose 1.4%. Bonds held steady as many investors focused on stocks. The yield on the benchmark 10-year Treasury note was unchanged at 4.67%. Wall Street's advance signaled its recovery from the February 27 worldwide plunge in stocks that sliced 416 points from the Dow. On Wednesday, the blue chips set their first new closing and intraday highs since February 20. "The main impetus has been, most of the bears and the gloom-and-doomers thought that first-quarter earnings would stink. Once again, the gloomy Guses have been proven wrong," said Alfred E. Goldman, chief market strategist at A.G. Edwards & Sons Inc. in St. Louis. EUROPE Shares gained ground as banks got a boost from more merger speculation, a bidding war loomed for pharmacy chain Alliance Boots and technology group SAP reported stronger earnings. The UK FTSE 100 index closed up 0.7% at 6,486.80, the German DAX Xetra 30 index rose 1.4% to 7,342.54 and the French CAC-40 index increased 1.9% to 5,938.90, a level not seen since February 2001. ASIA Japanese stocks rebounded from a sharp loss the previous day as investors bought up machinery and brewery shares ahead of the start of earnings season next week. The benchmark Nikkei 225 index rose 80.65 points, or 0.46%, to finish at 17,452.62 points after tumbling 1.7% Thursday on worries that Beijing will take steps to curb growth in China, a major trading partner for Japan. CURRENCY The dollar traded mixed against other major currencies as the euro backed down from a near all-time high and the British pound held above the $2 mark for a fourth day. The 13-nation euro hovered at levels last seen more than two years ago before dipping against the dollar. European finance ministers said currency's climb should not cause concern as the continent begins to see an economic turnaround. The euro rose to $1.3637 before falling back to $1.3601 in late New York trading. It reached an all-time high of $1.3667 in December 2004. Meanwhile, the British pound shrugged off a report that showed retail sales rising less than expected, and climbed as high as $2.0068 before settling to $2.0036 - up from $2.0019 late Thursday in New York. The pound climbed to a 26-year high Wednesday and earlier this week breached the $2 level for the first time since September 16, 1992, when Britain was kicked out of the European Exchange Rate mechanism, which pegged the pound to other EU member currencies. The spike came after a report showed UK wages rose at their fastest rate in almost three years from December to February. The euro has been boosted by historic levels of healthier European growth, continuing interest rate increases by the European Central Bank and concern over the strength of the US economy. That means a price shock for some visitors to the continent. In other trading, the dollar rose against Japan's currency, reaching 118.74 yen from 118.37 yen late Thursday. The US currency bought 1.1218 Canadian dollars, down from 1.1286. COMMODITIES Gold futures finished higher, helped by overnight Asian buying and renewed investment interest after a downward correction Thursday, analysts said. June gold rose $7.50 to finish at $695.80 a troy ounce on the New York Mercantile Exchange. In Nymex energy trading, front-month crude oil futures expired with a bang Friday, climbing sharply as traders covered oversold positions. The rally came amid a surge in gasoline futures and concern over weekend elections in Nigeria, where violence has hampered oil production. The May crude contract rose $1.55 to finish at $63.38 a barrel before expiring. The June contract climbed 79 cents to $64.11 a barrel.


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