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Last Updated: Wednesday, 25 April 2007, 20:43 GMT 21:43 UK
Record as Dow closes above 13,000
Trading floor of New York Stock Exchange
Strong results have boosted investor confidence
The Dow Jones index of leading US shares has closed above the 13,000 mark for the first time in history, powered by strong corporate results.

America's main share index ended trading at 13,089.08, up 135.14 points or more than 1% on the day

The fresh gains followed three record closing highs in succession last week as investors welcomed company gains.

Sentiment was further boosted on Wednesday as Pepsi's latest profits rose 16%, while Boeing's increased 27%.

'Favourable prospects'

The broader Standard & Poor's index closed at a six-year high of 1,495.23, up 14.82 points.

The index, closely followed by market experts, is now not far off its all-time high of 1,527.46 recorded at the height of the dot.com boom in 2000.

The Dow at 13,000 has no fundamental meaning but does have psychological value as a hurdle
Tom Sowanick, Clearbrook Financial

The Dow was also lifted by data showing US factory orders for durable goods, representing costly US manufactured items, rose in March at the fastest rate in three months.

So far 19 of the 30 companies listed on the Dow have reported their results for the first three months of 2007, and 13 of those have exceeded expectations.

The strong showing has eased investor concern that ongoing weakness in the US housing market could spread to the wider economy.

"It is generally a sign that while the economy has slowed, prospects still look fairly favourable and earnings are coming in over expectations," said Avery Shenfeld, senior economist at CIBC World Markets.

Potential threats

Despite the upward trend many analysts remain cautious, warning of potential obstacles to continued growth including possible instability in the Middle East and weakness in the housing market filtering through to the banking sector.

Turmoil in foreign markets, such as that which occurred in February when concerns over the Chinese economy saw the Dow lose 3% of its value in a single day, also present a threat.

Wal-Mart store in New York state
Strong consumer spending has underpinned company results

"Right now the markets are pretty ebullient," said Hugh Moore, a partner with financial advisors Guerite Advisors.

"But I don't think it is euphoria. There is a lot of discounting that anything can go wrong."

Analysts also pointed out that larger companies tend to do better in a slowing economy, since more of their sales come from abroad, and that the Dow may not be representative of the rest of the market.

Nevertheless, some investors are already looking towards future milestones.

"The Dow at 13,000 has no fundamental meaning but does have psychological value as a hurdle," said Tom Sowanick, chief investment officer at Clearbrook Financial.

"Once we go through the hurdle, the natural thing is to think of 14,000."


FTSE 100
23.70 0.44%
19.54 0.34%
Cac 40
14.48 0.38%
Dow Jones
78.53 0.76%
35.31 1.58%
S&P 500
11.22 1.02%
BBC Global 30
20.65 0.36%
Data delayed by at least 15 minutes

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