The fix looked like it was in on Tuesday, when investors collectively erased an 80-point fall in the Dow Jones Industrial Average in the final 90 minutes of trading, if only to prove that the index will now spend more time in the neighborhood of 12,000 than that of 11,900 — or lower.
Stocks did follow through on Tuesday’s momentum and posted modest gains on Wednesday, but the Dow ultimately fell short of closing above 12,000 for the first time since June 2008, ending with an 8-point gain to 11,985.
The Nasdaq outperformed the broader market, climbing 0.7% to 2740 and the S&P 500 climbed 5 points to 1297, nearing its own round-number target of 1300.
Of course, topping 12,000 is little more than a temporary psychological lift. We can all remember the Dow getting above 14,000 in late 2007 — and what do we have to show for it, other than the reality that the market is still down 15% from that point (without any fancy inflation adjustments, of course).
For now, investors — those long the market, anyway — can console themselves with the idea that the trend higher in stocks continues unabated — not only is the S&P 500 now up more than 3% in January alone, it’s up nearly 25% since early September.
While the momentum in stocks has slowed in recent days — the S&P 500 had already climbed to just below 1 point below where it is now on Jan. 18, after all — it does seems like it will take a multitude of bad earnings reports or consistently negative economic data to bring about the correction that bears continue to expect.
And that’s just not the kind of newsflow greeting traders each day. Earnings reports seem generally within expectations, with the downside surprises appearing isolated enough that the general perception of a slowly recovering economy is hard to refute.
Economic data, too, is likewise up-and-down enough to not do too much damage to stock-market momentum. The Fed’s announcement on Wednesday, for example, that the economy’s expansion of labor has been “disappointingly slow” continues to be at odds with the message that investors can infer from the Fed’s move to prime the pump and keep asset prices soaring.
As for more market specifics: energy stocks pushed higher, led by names like Haliburton (NYSE:HAL) and Baker Hughes (NYSE:BHI). Oil prices moved back above $87 a barrel, and gold and silver both bounced back.
Financials, including regional banks, failed to join the rally, leading to a reasonable expectation that near-term upside may be harder to come by for the broader market. The SPDR Financial Select Sector (NYSE:XLF) exchange-traded fund was off a penny, while the SPDR KBW Regional Banking (NYSE:KRE) ETF fell 0.7%.
Such data does support the bear theory that the rally is getting a little tired, and that, at some point, stocks will be more universally thought to be ahead of themselves.
That day was not today, but it won’t be surprising to see a fallback after a close above 12,000 is finally accomplished.
