The Dow Jones industrial average soared to a historic high Wednesday, closing above the psychologically important 13,000 mark for the first time.
A slew of strong earnings reports by large U.S. companies stoked Wall Street investors, who appear to be shaking off concerns about a slowing U.S. economy and a tepid housing market.
Colorado stocks joined in the rally. The Bloomberg index of 111 public companies based in Colorado closed up 3.49, or 0.83 percent, at a record 425.88. Among the biggest gainers Wednesday were Whiting Petroleum, up 5.36 percent, and Liberty Global, up 4.51 percent.
The Dow Jones industrial average, the widely watched basket of 30 blue-chip stocks, briefly surpassed 13,100 before closing at 13,089.89, up 135.95, or 1.05 percent. The broader Standard & Poor’s 500 and the Nasdaq also ended the day higher.
The recent rally either portends more gains to come or offers investors an opportunity to lock in gains before a possible decline, experts said.
“I’m not sure I’d be throwing money with abandon into the market right now,” said Brian Barish, president of Cambiar Investors in Denver. “The market has had a heck of a run, and a sell-off tends to follow.”
Yet Barish said stocks are relatively inexpensive compared with historical averages. The U.S. stock market as a whole is trading at about 16 times estimated 2007 earnings, a multiple in line with the market’s average since World War II, he said.
Barish recommended that investors consider pharmaceuticals, big banks and certain technology companies, including Microsoft Corp. and Intel Corp.
Paul Dickey, president of INS Capital Management, said investors should avoid buying energy, utility or emerging-market mutual funds. Instead, he predicted that technology, financial stocks and more established international markets would move higher in the short term.
Dickey added that the broader S&P 500 remains about 2 percent below its all-time high of 1,527.46 set in March 2000. The S&P closed Wednesday at 1,495.42, up 1 percent.
“At this time, I do not expect that the S&P will just blast through the old highs of year 2000 – simply because the ascent has been too steep” during the past two months, Dickey said.
Even so, he noted that any sizable sell-off could “prove an opportunity” for investors to buy stocks.
John Riddle, chief investment officer for BRC Investment Management, said the performance of individual stocks has driven the rally – not simply confidence in the market in general.
With that in mind, Riddle said investors must be selective about which stocks and mutual funds to pour money into.
Riddle, who uses complex computer models to make investment decisions, said Denver-based Qwest Communications is among the most attractive stocks he follows.
He said 15 financial analysts have raised their earnings estimates for Qwest during the past 12 weeks. By comparison, more than 30 analysts have lowered earnings projections for Verizon Communications. Riddle says industrial stocks and consumer-service-related companies are poised for appreciation.
David Prokupek, chief executive of Geronimo Financial, said investors should continue buying international mutual funds or companies with operations overseas – despite concerns by some experts that China and other developing countries are too richly valued.
“The non-U.S. markets continue to be a good place to be,” he said. “The need for lending and other services is stronger in China than in the U.S.”
Staff writer Will Shanley can be reached at 303-954-1260 or wshanley@denverpost.com.
WHERE TO PUT YOUR MONEY
Advice from four metro-area professional investors to take advantage of the current market:
John Riddle, chief investment officer of BRC Investment Management in Greenwood Village
David Prokupek, chief executive of Geronimo Financial in Denver
Brian Barish, president of Cambiar Investors in Denver
Paul Dickey, president of INS Capital Management in Denver
