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Dow Closes Above 13,000 for First Time Since May 2008

Feb. 28 (Bloomberg) -- Bloomberg's Pimm Fox and Deborah Kostroun report on the performance of the U.S. equity market today. U.S. stocks rose, sending the Dow Jones Industrial Average to its first close above 13,000 since 2008, as better-than-estimated consumer confidence data and a drop in oil bolstered optimism in the world’s largest economy. (Source: Bloomberg)

U.S. stocks rose, sending the Dow Jones Industrial Average (INDU) to its first close above 13,000 since 2008, as better-than-estimated consumer confidence data and a drop in oil bolstered optimism in the world’s largest economy.

Apple Inc. (AAPL) added 1.8 percent and its market capitalization approached $500 billion as it is said to unveil a new iPad next month. Micron Technology Inc. (MU) jumped 3.7 percent after buying Intel (INTC) Corp.’s stake in two wafer factories as the companies expand their venture. Intel advanced 1.3 percent. Priceline.com Inc. surged 7 percent to the highest level since 1999 (PCLN) as profit beat estimates. The Bloomberg U.S. Airlines Index rallied 1.7 percent as oil fell the most in more than five weeks.

The Standard & Poor’s 500 Index increased 0.3 percent to 1,372.18 at 4 p.m. New York time, gaining for a fourth day, the longest streak since Jan. 23. The Dow advanced 23.61 points, or 0.2 percent, to 13,005.12. The 30-stock gauge closed above 13,000 after three unsuccessful attempts over the past week.

“13,000 is just a number,” Malcolm Polley, who oversees about $1.1 billion as chief investment officer at Stewart Capital in Indiana, Pennsylvania, said in a telephone interview. “The U.S. economy is in decent shape. The market is not expensive.”

Today’s gain put the Dow on pace for a fifth straight month of gains, the longest rally since April, amid better-than-estimated economic data. Still, the index is 8.9 percent below its all-time high of 14,164.53 in October 2007. (SPX) The S&P 500 has rallied 4.6 percent in February, poised for a third monthly gain, the longest stretch in a year. The index trades at about 14.1 times reported earnings, compared with the average since 1954 of 16.4 times, according to data compiled by Bloomberg.

Economic Data

Stocks rose as the Conference Board’s index increased to the highest level in a year. The euro strengthened versus the dollar before the European Central Bank provides funds tomorrow to support banks. Earlier today, stocks dropped as orders for U.S. durable goods fell in January by the most in three years. Separate data showed that home prices in 20 U.S. cities declined more than forecast in December.

“I don’t have rose-colored glasses on, but I think the path of least resistance is up,” Richard Weeks, the Vienna, Virginia-based managing director and partner at HighTower’s VWG Wealth Management, said in a telephone interview. His firm oversees more than $20 billion. “The news is generally good. Short-term, all signs say that risks have been reduced.”

Seven out of 10 groups in the S&P 500 advanced. Technology shares, which comprise 20 percent of the index, added 0.9 percent as a group.

Apple Rallies

Apple, the world’s largest technology company, gained 1.8 percent to $535.41. The shares advanced for a fourth straight day to a record. The company will hold a product event on March 7 in San Francisco, where it’s said to be releasing the third generation of its best-selling iPad tablet computer.

“We have something you really have to see. And touch,” Apple said today in an invitation, which features a picture of an iPad screen. The new device will sport a high-definition display, run a faster processor and work with speedier wireless networks, people familiar with the product said last month.

The Philadelphia Semiconductor Index climbed 1.6 percent as 23 of its 30 stocks increased.

Micron surged 3.7 percent to $8.88. The stock has gained 14 percent over three days. The company will supply Intel products based on a technology called Nand flash memory. The chipmakers will also extend their Nand flash development program, expanding it to include emerging technologies. Intel, the world’s largest chipmaker, added 1.3 percent to $27.24.

Priceline’s Results

Priceline gained 7 percent, the most in the S&P 500, to $632.76. The company has weathered the European debt crisis better than Expedia Inc. (EXPE) and Orbitz Worldwide Inc., and it’s expanding into emerging markets and new businesses.

Ten out of 14 stocks in the Bloomberg U.S. Airlines Index advanced. Crude oil for April delivery fell $2.01 to settle at $106.55 a barrel on the New York Mercantile Exchange. It was the biggest decline since Jan. 20. US Airways Group Inc. increased 5.9 percent to $7.41. United Continental Holdings Inc. added 2.5 percent to $20.58. Energy shares in the S&P 500 lost 0.2 percent as a group.

Office Depot Inc. (ODP) increased 19 percent, the most since May 2009, to $3.59. The second-largest U.S. office-supply chain posted earnings excluding some items of 3 cents a share in the fourth quarter. Analysts, on average, expected the company to break even, according to a Bloomberg survey.

Domino’s Pizza Inc. (DPZ) soared 16 percent to $38.82. The pizza-delivery chain announced a debt refinancing that may result in a special dividend.

Apollo Tumbles

Apollo Group Inc. (APOL) fell 16 percent, the most in the S&P 500, to $43.04. The for-profit educator cut its operating profit forecast for 2012 to no more than $725 million, below the previous estimate of as much as $750 million.

Other education shares declined. ITT Educational Services Inc. (ESI) retreated 5.4 percent to $68.29. DeVry Inc. (DV) fell 3.8 percent to $35.41.

The Russell 2000 Index (RTY) of small companies slid 0.4 percent to 823.80. Sykes Enterprises Inc. dropped 17 percent to $14.28. The operator of call centers forecast full-year earnings of $1.20 a share at most, below the average analyst estimate of $1.46.

Warren Buffett’s pursuit of bigger acquisitions makes companies from Stanley Black & Decker Inc. (SWK) to Parker Hannifin (PH) Corp. the most attractive takeover targets, according to data compiled by Bloomberg.

‘On The Prowl’

Berkshire Hathaway Inc. (BRK/A)’s 81-year-old chairman and chief executive officer said in his annual letter to shareholders on Feb. 25 that he was “on the prowl” for large deals after spending more than $35 billion on companies including Lubrizol Corp. and Burlington Northern Santa Fe in the past two years.

With Berkshire generating $1 billion a month in free cash flow, the world’s most successful investor is eyeing takeovers as near-zero percent interest rates limit returns in fixed-income markets and the Omaha, Nebraska-based company’s cash hoard increased to $37.3 billion.

Stanley Black & Decker, the world’s biggest maker of hand tools, and Parker Hannifin, which controls more than half the market for fluid-powered valves, are among 21 U.S. companies that meet the acquisition criteria in Berkshire’s annual report, data compiled by Bloomberg show.

Stanley Black & Decker and Parker Hannifin “seem very plausible acquisition candidates for Buffett,” said Timothy Ghriskey, who oversees $2 billion as chief investment officer of Solaris Group in Bedford Hills, New York. “We would expect him to make a larger deal. He’s a man of his word.”

List of U.S. Companies:
Ranked in Highest 500 by Revenue
Market Capitalization from $5 Billion to $25 Billion
10-Year Return on Invested Capital > S&P 500 Median Value
Capital Expenditures / Net Fixed Assets > 10%
5-Year Net Income Growth in Highest 50%
5-Year P/E Ratio < S&P 500 Median Company Value
*Excludes Banks, Technology and Biotechnology Companies

Advance Auto Parts Inc.
AutoZone Inc.
Cooper Industries Plc
Cummins Inc.
DaVita Inc.
Discover Financial Services
Dish Network Corp.
Eastman Chemical Co.
Family Dollar Stores Inc.
Flowserve Corp.
Forest Laboratories Inc.
Goodrich Corp.
Hormel Foods Corp.
Humana Inc.
KBR Inc.
Parker Hannifin Corp.
PPG Industries Inc.
Ross Stores Inc.
Sara Lee Corp.
Stanley Black & Decker Inc.
VF Corp.

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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