Dow hits 5-year high despite US budget mess
NEW YORK, United States - The Dow Jones Industrial Average reached a new five-year high Friday as investors looked past the risks to the economy of impending federal spending cuts and bid up equities.
The Dow jumped 35.17 points (0.25 percent) to 14,089.66, less than 100 points from all-time high of 14,164.53 on October 9, 2007, ahead of the markets crash and the Great Recession.
The broad-based S&P 500 increased 3.52 (0.23 percent) to 1,518.20, while the tech-rich Nasdaq Composite Index gained 9.55 (0.30 percent) to 3,169.74.
Friday's trading came as $85 billion in spending cuts were to begin taking effect, as Washington policy makers failed to agree on a compromise for a more moderate deficit reduction program.
"Markets are learning to deal with this kind of uncertainty and so they don't get rattled around with every gyration in fiscal policy," said Paul Edelstein, an economist with IHS Global Insight.
"US data has been very good this week and monetary policy has been very supportive."
Fresh data that showed consumer spending rose in January at double the rate of December, despite lower personal income.
Markets were further cheered by a report that showed US manufacturing activity hit the highest level since 2011. Of the 18 manufacturing industries surveyed, 15 reported growth, compared with 13 in January.
Apple shares tumbled 2.5 percent after a US judge invalidated some $450 million of a $1 billion award to be paid by Samsung to Apple in a much-watched patent lawsuit. More litigation in the case is expected.
Best Buy picked up 4.0 percent after it topped earnings expectations, even as it reported a decline in same-store sales.
Separately, the company announced that the deadline had passed for founder Dick Schulze to submit his expected offer to buy the company.
Clothing retailer Gap climbed 2.8 percent after reporting profits and revenues above forecast levels, and boosting its dividend.
Deckers Outdoor, which sells the popular UGG and Teva brands of shoes, soared 15.4 percent after announcing record annual revenues.
Groupon, the online discount coupon distributor, rebounded 11.4 percent after Thursday's 24.3 percent plunge on forecasts of continuing losses in the current quarter. The company replaced its chief executive with a management team from the board of directors.
Bond prices rose. The yield on the 10-year Treasury bond declined to 1.85 percent from 1.89 percent late Thursday, while the 30-year retreated to 3.07 percent from 3.09 percent. Bond prices and yields move inversely. - Rappler.com