DOW - End Shy of Benchmarks

Dow

11,989.83

+4.39

+0.04%

By: Abby Schultz

Stocks ended up slightly as the major indices failed to close above significant benchmarks soon after Microsoft, in a surprise move, released earnings before the bell.

The Dow Jones Industrial Average rose 4.39 points or 0.04 percent, to close at 11,989.83, its highest close since June 19, 2008. On that date the Dow closed above 12,000, but the blue-chip index has to end above that psychologically important benchmark the last two sessions despite surpassing it in intraday trading.


The S&P 500 rose 2.91 points, or 0.2 percent, to close at 1,299.54, its highest close since Aug. 28, 2008, which was also the last time the broad market index closed above 1,300.

The Nasdaq gained the most in percentage terms, rising 15.78 points, or 0.6 percent, to close at 2,755.28.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell below 17.

Among key S&P 500 sectors, financials, consumer discretionary, and industrials gained, while telecom and consumer staples fell.

The market seemed to stall as it hit the major thresholds, but a sell-off doesn't appear to be in the offing, at least yet.

According to Yu-Dee Chang, chief principal at ACE Investment Strategists, over the past 90 years, the market in any given year has ended below the closing level of the year before at some point. In other words: "There's an 89% chance that we will give up what we gained this year," Chang says.

On average, the correction, when it happens is about 9 percent. Chang thinks it will be more in the neighborhood of 6 to 8 percent this time. By year end, however, Chang expects the market will deliver returns in the upper-single-digits to double-digits.

As a result, he said he is "very cautiously long" the market with the caveat he is "getting ready to take a lot off the table." And when the market does correct, he said he'll be ready to step back in.

Certain indicators confirm the notion that the market is due for a sell-off, such as record numbers of stocks hitting 52-week highs, said Michael Sheldon, chief market strategist at RDM Financial Group. Another indicator: smaller capitalization stocks have tended not to outperform large caps in recent weeks, Sheldon said.

But he adds, "generally speaking, the environment remains positive. Any pullback that we see will mostly be short term in nature."