Dow closes above 10,000

The Dow Jones industrials closed above 10,000 today, a milestone not seen in 18 months.

Investors cheered Federal Reserve minutes which suggested US interest rates would not move higher in the near future.

Stocks gained ground on a better-than-expected November retail sales report before sprinting higher in the late afternoon after the Fed released the minutes indicating its concerns about a sluggish job market.

“What got the rally started was the Fed releasing their minutes,” said Michael Murphy, head trader at Wachovia Securities in Baltimore. “It’s the old Goldilocks theme – low rates, low inflation and strong growth,” explaining that it was the right combination for a strong advance.

“This market is ready to a have good run to the end of the year. People are looking at the economy and are starting to see good growth,” he said.

The Dow closed up 86.30, or 0.9%, at 10,008.16. The last time the index closed above 10,000 was May 24, 2002, when it stood at 10,104.26.

The broader gauges also finished higher. The Nasdaq composite index rose 37.67, or 2%, at 1,942.32. The Standard & Poor’s 500 index gained 12.16, or 1.2%, at 1,071.21.

The milestone marked a solid comeback from the five-year low of 7,286.27 on October 9, 2002 and represents the return of the bull market following three years of bitter declines. Many analysts had wondered whether the Dow could push past 10,000 on a longer-term basis, citing psychological resistance.

Earlier in the day, the Commerce Department reported a 0.9% rise in November retail sales. It was the largest advance since August, and beat the expectations of economists, who had forecast a 0.7% rise.

Separately, the Labour Department said new claims for unemployment benefits rose last week by a seasonally adjusted 13,000 to 378,000, suggesting the pace of layoffs was levelling off.

Goodyear Tyre & Rubber declined 84 cents to 6.52 after the company delayed filing its 2002 10-K because of accounting problems in Europe. The filing was being closely watched by union officials because Goodyear had promised to strengthen its balance sheet without laying off workers and closing plants, and had planned to raise cash through debt and other financing. The filing delay will likely postpone those efforts.

Wal-Mart Stores fell 14 cents at 52.81 on reports that it has approached British supermarket group Safeway PLC with an offer to buy part of its business for nearly 2 billion. The move is aimed at foiling a rival offer for Britain’s No 4 grocer.

Unisys dropped 1.46 to 14.44 after company executives said they were expecting pension expenses of 80 to 90 million next year. Though the firm reiterated its guidance, analysts said the expenses were sure to hurt its bottom line in 2004.

Gainers included IKON Office Solutions, which rose 1.75 to 10.55, after it agreed to sell certain assets and liabilities of its IOS Capital unit to GE Vendor Financial Services for about 1.5 billion. General Electric was up 67 cents at 30.39.

Advancing issues outpaced decliners more than 3 to 1 on the New York Stock Exchange. Volume was moderate.

The Russell 2000 index, which tracks smaller company stocks, rose 14.43, or 2.7%, at 542.92.