Dow Edges Closer To 13,000, Then Drops Back
The Dow Jones industrial average made an early run at 13,000 on Tuesday, but stocks fell and leveled off. Investors were wrestling with what to make of a deal to prevent Greece from a potentially catastrophic default on its debt. The Dow made it as high as 12,983, then quickly lost its gains. It was unchanged at 12,949 just after 10 a.m. EST. The Dow hasn’t seen 13,000 since May 2008, before a financial crisis brought the U.S. economy to its knees.
The broader Standard & Poor’s 500 was up a point at 1,362. The Nasdaq composite index fell a point to 2,950.
Under the bailout deal, Greece will get euro130 billion, or about $172 billion, from other European nations and the International Monetary Fund. It will also owe euro107 billion less to investors who own its government bonds.
After months of the talks crawling along and vague headlines yanking the market up and down, the conclusion was almost anticlimactic, with an agreement already expected by the markets.
European markets fell after the deal was announced. Stocks were down almost 4 percent in Greece, a little more than 1 percent in Spain and less than 1 percent in France and Britain.
Investors noted that Greece remains in deep recession. Its private-sector investors were also forced to take a 53.5 percent loss on the face value of their bonds, which could discourage future investment.
The U.S., where markets were mixed, enjoyed strong earnings reports from several big-name companies, including Home Depot and Dollar Thrifty. The exception was Wal-Mart, which reported a 15 percent drop in quarterly profits.
The Dow has been climbing more or less steadily since the start of the year, adding 6 percent since Dec. 30. On three days this year, it has added more than 100 points. It hasn’t lost 100 on any day.
Its last close above 13,000 was May 19, 2008, when Lehman Brothers and Merrill Lynch investment banks still existed and unemployment was 5.4 percent, far below today’s 8.3 percent.
Among big movers Tuesday:
-Wal-Mart fell 4 percent after missing analysts’ expectations for revenue and per-share earnings. The world’s biggest retailer has lost some of its momentum in the past couple of years with strategic errors like a brief foray away from “everyday low prices,” which turned off cash-strapped bargain hunters, and a short attempt to declutter its shelves and offer fewer items, which turned off customers who went there for the convenience.
-Home Depot rose 2 percent after beating analysts’ expectations for revenue and per-share earnings. The home-repair giant has been hurt by the housing market, which has led homeowners to take on fewer expensive home renovations. Warm weather helped drive small-scale home projects in the latest quarter.