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Dow tops 13,000, sinks back after Greek bailout

Update: February, 22/2012 - 10:50

NEW YORK – The Dow Jones Industrial Average topped 13,000 for the first time since May 2008 before falling back to close nearly flat on Tuesday, in a bumpy day spurred by news of a new bailout deal for Greece.

After a slow start the blue-chip index pushed across the key level to touch 13,005.04, last seen when the markets began to sink in early 2008 as the financial crisis broke and a deep recession took hold.

But disappointing results from Wal-Mart and tumbling transportation stocks as fuel prices soared left trade to sag.

The Dow finally closed up 15.82 points (0.12 per cent) at 12,965.69.

The broad-based S&P 500 rose 0.98 point (0.07 per cent) to 1,362.21, while the tech-heavy Nasdaq Composite slipped 3.21 (0.11 per cent) to 2,948.57.

Shares mainly took their cue from the long-awaited deal reached in Brussels early on Tuesday on a new bailout of Greece.

The deal – which analysts say still harbours deep weaknesses – includes a 107 billion euro (US$141 billion) writedown of the country's debt by private debt holders and 130 billion euros in new financing from the European Union and the International Monetary Fund.

"Chalk one up for European leaders as they were finally able to agree to the second bailout package for Greece. Now the hard work begins – reinventing Greece's economy," said Scott Atkinson of Briefing Research.

"The main problem is that, after years of economic contraction, the eurozone does not seem to realise that Greece's problems will not be solved without a strategy for growth," said IHS Global Insight analysts.

Crossing the 13,000 line marked the market's continuing comeback after it plummeted from a high of 14,164 on October 9, 2007, to 6,440, 17 months later.

It "adds a little level of excitement" to trading, said Mace Blicksilver of Marblehead Asset Management

"The market is reacting properly to it, it is a small positive" on top of the Greece debt deal, he said

On the other hand, the deal sent oil prices soaring, and that in turn savaged the share prices of airlines.

US Airways plunged 11.4 per cent, United Continental 9.1 per cent, JetBlue 8.8 per cent, and Delta 7.2 per cent.

Alcoa picked up 2.6 per cent after initialing a joint venture in key market China with China Power Investment Corporation.

Wal-Mart sank 3.9 per cent after it missed earnings forecasts for its fourth quarter in part due to heavy price-cutting in the industry during the busy Christmas season.

Bond prices slipped. The yield on the 10-year Treasury rose to 2.05 per cent from 2.01 per cent on Friday, while the 30-year rose to 3.19 per cent from 3.16 per cent

Bond prices and yields move in opposite directions. -- AFP

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