By Victor Reklaitis, MarketWatch
NEW YORK (MarketWatch) -- The Dow Jones Industrial Average
achieved its first-ever close above 16,000 on Thursday as U.S.
stocks rallied, boosted by better-than-expected data on weekly
jobless claims and as investors reconsidered their concerns about
the Federal Reserve's potential reduction in its bond-buying
program.
"The market is becoming more and more comfortable with the
tapering talk," said Andrew Zimmerman, chief investment strategist
at DT Investment Partners, in an interview.
The Dow Jones Industrial Average (DJI) rose 109.17 points, or
0.7%, to finish at 16,009.99, scoring a record close. The S&P
500 (SPX) gained 14.48 points, or 0.8%, to end at 1,795.85, staying
below its own milestone level of 1,800.
The Nasdaq Composite (RIXF) advanced 47.88 points, or 1.2%, to
finish at 3,969.15.
On Wednesday, stocks slumped after minutes from the last Fed
meeting showed the central bank was on track to slow its
bond-buying program that has helped power stocks to record
levels.
But the main indexes bounced back Thursday. Andrew Wilkinson,
chief economic strategist at Miller Tabak & Co., pointed out in
a note Thursday that "any reduction in the flow of purchases by the
Fed inherently smacks of economic recovery."
The market also took in tame inflation data, a
weaker-than-expected manufacturing report and speeches by Federal
Reserve officials. Check out MarketWatch's recap of Thursday's
stock-market action.
* Today's market-moving news: The Labor Department said weekly
jobless claims fell by 21,000 to 323,000, better than forecasts for
334,000. In addition, wholesale prices dropped 0.2% last month,
reflecting a lack of inflationary pressure. On the downside, the
Philadelphia Fed's index of manufacturing conditions dropped to 6.5
in November, well below expectations, but the market showed little
reaction to that report. Among Thursday's Fed speeches, Richmond
Fed President Jeffrey Lacker reiterated his opposition to the
central bank's bond buys.
* What strategists are saying: While uber bear Marc Faber sees
asset bubbles just about everywhere, bubble talk could be a good
contrarian indicator, according to DT's Zimmerman. "I don't think
sentiment is really that bullish out there, if everybody thinks
we're in a bubble and is looking for a correction," Zimmerman told
MarketWatch on Thursday. "To us it's a contrarian indicator,
because we think stocks will continue to rally." Meanwhile, Peter
Garnry, head of equity strategy at Saxo Bank, suggested that
traders have a fear of missing out in a rally that has left the
S&P 500 up by about 26% for the year. He said in emailed
comments that a "sense is spreading that if you are not on the
bandwagon, your performance will look bad."
* 2014 predictions: Goldman Sachs sees a 67% probability of the
S&P 500 falling 10% at some point in 2014. Meanwhile,
Schaeffer's Investment Research pointed out that since 1991, the
S&P has always gained in the year that came after a 20%-plus
move for that benchmark index.
* Today's movers & shakers: Retailers slid in the wake of
disappointing quarterly results or outlooks. Target Corp. fell 3.5%
after posting weaker margins and earnings at its U.S. business,
while Dollar Tree Inc. shed 4.5% after its earnings fell in the
third quarter. Read more in the Movers & Shakers column.
* Other markets: European stocks were mostly lower, while
Chinese manufacturing activity showed a deceleration, which hit
Hong Kong stocks. Gold prices extended losses on Thursday, while
oil prices jumped above $95 a barrel. The dollar was little
changed, but Treasury prices advanced.
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