Dow ends above 14,000

Associated Press photo by RICHARD DREW -- A screen on the trading floor of the New York Stock Exchange shows the Dow Jones industrial average crossing the 14,000 mark last hit in 2007. Show caption
Associated Press photo by RICHARD DREW -- A screen on the trading floor of the New York Stock Exchange shows the Dow Jones industrial average crossing the 14,000 mark last hit in 2007.

The Dow closed above 14,000 on Friday for the first time in more than five years. The Dow is now just 155 points away from its record close.

It was just a number on a board, but 14,000 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 traditionally considered 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. job growth pushed it over the mark.

“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.

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.

In other news:

MERCK: The drugmaker fell more than 3 percent, down $1.42 to $41.83. Its fourth-quarter profit suffered because of competition from generic medicines against its blockbuster allergy drug Singulair.

METLIFE: The insurance company rose more than 2 percent, up 86 cents to $38.20, after saying it plans to buy the largest private pension fund administrator in Chile.

ZOETIS: The animal health business that Pfizer just spun off made its debut on the stock market. It shot up 19 percent, rising $5.01 to $31.01.

MATTEL: Weak demand over the holidays for toys like Barbie and Matchbox led Mattel’s results to fall short of expectations in the key holiday quarter. A litigation charge also weighed on results and net income fell 17 percent.

CRACKER BARREL: Kraft Foods is suing Cracker Barrel Old Country Store over the restaurant chain’s plans to use the “Cracker Barrel” name on packaged ham and bacon.

HSBC: It has received approval from Chinese regulators for the sale of its $9.4 billion stake in Ping An Insurance to a Thai conglomerate.

ELECTROLUX: Sweden-based Electrolux said fourth-quarter earnings rose by a third compared to a year earlier.