Dow hits record high

Wall Street shares surged higher Monday, kicking off the fourth quarter with gusto, with the Dow hitting a record high as investors appeared to bank on easier credit. The Dow Jones Industrial Average was up 142.74 points (1.03 percent) to 14,038.37 around 1615 GMT and the tech-heavy Nasdaq advanced 27.69 points (1.02 percent) to 2,729.19.
The broad-market Standard & Poor's 500 index gained 15.06 points (0.99 percent) at 1,541.81. Earlier the Dow breached the 14,000-point psychological barrier for the first time since July, powering up to a record high of 14,036.58 points, toppling the previous record set on July 17 at 14,021.95.
The last time the Dow closed above the 14,000-point barrier was July 19, when it finished at 14,000.41 points. "The Dow, in fact, has surpassed the 14,000 level, meaning it is on track for a record close and that it has made up the entirety of everything it lost in the midst of the credit market turmoil this summer," wrote analysts at Briefing.com.
Wall Street bounced higher after another positive week in which investors appeared to be looking beyond the gloomy outlook for the US economy and betting that current problems in the housing and credit sectors will be short-lived.
"The markets appear to be coming to the conclusion that credit issues and a weak housing sector will not lead to a recession. That reduces the downside risk to the market, and provides a better underlying tone," said Dick Green of Briefing.com.
Analysts say many investors believe the Federal Reserve half-point rate cut on September 18, and possibly more cuts in the coming months, will help the world's biggest economy weather the storm. However, Fred Dickson, chief market strategist of DA Davidson & Co, sounded a cautious note ahead of Friday's unemployment report for September.
"Heading into the fourth quarter, we are aware of the big gains posted in the fourth quarter in each of the last four years. Given the weakening economy, we aren't optimistic that history will repeat itself this fall," Dickson said.
"We aren't looking for a major correction, but lots of stock price volatility especially during the next six weeks as investors digest third-quarter earnings reports and what we believe will be tepid fourth-quarter earnings guidance."
He said that with the dollar weakening, oil prices remaining above 80 dollars a barrel and housing already in a deep recession, "we don't expect the employment report to be robust."
Investors shrugged off a warning by Citigroup, the largest US financial group by market value. The bank said it sees third-quarter profit down 60 percent compared with a year earlier due in part to failed mortgage investments. Shares in Citigroup, which is to report third-quarter results on October 15, jumped 2.46 percent to 47.82 dollars. Other financial stocks rallied. Lehman Brothers was up 2.00 percent at 63.00 dollars, Merrill Lynch soared 3.56 percent to 73.82 and J.P. Morgan Chase rose 1.79 percent to 46.64.