Another strong day in the stock market, another good day for regional stocks.
Most regional stocks finished higher Friday, with the biggest movers being Cerner, up nearly 2 percent; Garmin, up 1.6 percent, Kansas City Southern, up 1.3 percent and Sprint, up 1.1 percent.
About the only major local stock to fall was DST, which closed down 0.3 percent, a day after it reported strong year-end financial results.
The big story of the day, however, was the Dow, which closed above 14,000 on Friday for the first time in more than five years.
Sure, it was just a number on a board. But it was enough to raise the hopes of some investors and cause others concern about an overheated market. And it brought reminders of a different era, back before the financial crisis rocked the world economy.
The Dow Jones industrial average, a stock market index that is supposed to be a benchmark for how the entire market is faring, had been rising fairly steadily for about a month. On Friday, strong auto sales and optimism about U.S. jobs pushed it over the mark. The Dow is now just 155 points away from its highest close ever.
“There’s a newfound enthusiasm for the equity market,” said Jim Russell, regional investment director at U.S. Bank Wealth Management in Minneapolis.
But market watchers were divided over what the Dow milestone – or even what a potential new all-time high – really means. To some, it’s an important booster to hearts and minds, making investors feel optimistic and thus more willing to bet on the market.
“The Dow touching 14,000, it matters psychologically,” said Peter Cardillo, 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, which could make January the first month in nearly two years where stock-focused funds had a net inflow.
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. Professional investors usually pay more heed to the Standard & Poor’s main index, which tracks 500 companies compared to the Dow’s 30. The Dow garners attention, they say, because it’s more familiar to the general public.
Joe Gordon, managing partner at Gordon Asset Management in North Carolina, wasn’t celebrating Friday. He thinks the gains won’t last. The fact that small investors are finally piling back in the stock market, he said, is not a reason for optimism but a sign that it’s getting overhyped and due to fall.
After the Dow hit its all-time record in 2007, it fell almost steadily for the next year and a half. It lost more than half its value before starting to tick back up again.
“It is good trivia to talk about on television and the radio,” Gordon said, referring to the 14,000 mark. “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.
The Dow ended Friday 149.21 points higher to 14,009.79. The other indexes were also up. The S&P 500 rose 15.06 to 1,513.17. The Nasdaq composite index was up 36.97 to 3,179.10.
The BATS 1000 rose 155.30 points, or 0.92 percent, to close at 17,092.24.
Auto sales helped. Toyota, Ford, GM and Chrysler all reported double-digit gains for January.
The government jobs report that pushed stocks forward was mixed, but traders chose to focus on the positive. The U.S. said it added 157,000 jobs in January, which was in line with expectations. Unemployment inched up to 7.9 percent from 7.8 percent in December. Many economists, though, were encouraged because the government now says that hiring over the past year was higher than originally thought.
The jobs number is based on a survey of employers. The unemployment rate is based on a separate survey of households, which is why they can diverge.
Capitol Federal Financial rose 10 cents, or 0.85%, to close at $11.85.
Cerner Corp. rose $1.57, or 1.90%, to close at $84.12.
Commerce Bancshares Inc. rose 30 cents, or 0.80%, to close at $37.85.
Compass Minerals rose 40 cents, or 0.56%, to close at $72.45.
DST Systems Inc. fell 23 cents, or 0.34%, to close at $66.71.
Ferrellgas Partners L.P. rose 9 cents, or 0.47%, to close at $19.41.
Garmin Ltd. rose 61 cents, or 1.61%, to close at $38.50.
Great Plains Energy rose 13 cents, or 0.61%, to close at $21.53.
H&R Block Inc. rose 9 cents, or 0.40%, to close at $22.86.
Inergy L.P. rose 21 cents, or 1.05%, to close at $20.25.
Kansas City Life Insurance Co. rose 12 cents, or 0.31%, to close at $38.86.
Kansas City Southern rose $1.23, or 1.32%, to close at $94.34.
Layne Christensen Co. rose 27 cents, or 1.19%, to close at $22.94.
O’Reilly Automotive Inc. rose 74 cents, or 0.80%, to close at $93.39.
Sprint Nextel Corp. rose 6 cents, or 1.07%, to close at $5.69.
UMB Financial Corp. rose 38 cents, or 0.86%, to close at $44.65.
Waddell & Reed Financial Corp. rose 47 cents, or 1.18%, to close at $40.17.
YRC Worldwide Inc. fell 6 cents, or 0.96%, to close at $6.18.