Dow Industrials Top 12000 Amid Strong Healthcare Earnings

January 26, 2011

The Dow Jones Industrial Average traded above 12000 for the first time in nearly three years, as investors were heartened by signs of earnings growth, including reports from some of the biggest names in healthcare.

The Dow Jones Industrial Average traded above 12000 Wednesday, the first time the market barometer has breached that mark since June 2008. The Standard & Poor’s 500 stock-index flirted with 1300, a level it last hit in August 2008.

The Dow industrials ended the day up 8.25, or 0.1%, at 11985.44. The Dow industrials still remain far below its intraday market peak of 14198.10 in October 2007, though it’s nearly doubled from its March 2009 financial-crisis low of 6469.95. The Nasdaq Composite Index rose 20.25 to 2739.50, while the S&P 500 climbed 5.45 to close at 1296.63.

Major market indexes seesawed in trading for much of the week, as investors digested a torrent of quarterly earnings reports. Investors have been heartened by signs of economic growth from some of the biggest names in healthcre.

Two big medical-equipment makers -- Dow industrial component General Electric Co. (NYSE: GE) and rival Siemens (NYSE: SI) -- in particular stood out as beneficiaries of strengthening emerging markets and signs of increasing demand from the West for durable goods. GE’s shares were at $20 in trading Wednesday, while Siemens American depositary shares were at $129.47.

Abbott Laboratories (NYSE: ABT) posted quarterly sales and earnings that slightly topped forecasts, buoyed by demand for its prescription drugs and heart stents. The Abbott Park, Ill., company also said it would lay off 2% of its workforce, or about 1,900 jobs, over the next several years as it restructures its manufacturing operations. Abbott shares were at $47.05.

Larger rival Johnson & Johnson (NYSE: JNJ) earnings were hit by mass product recalls, and predicted 2011 earnings growth of just 1% to 3% as it works to fix the problem with its troubled manufacturing operation. Shares of the New Brunswick, N.J., consumer-products giant were at $60.01.

St. Jude Medical Inc. (NYSE: STJ) posted higher fourth-quarter earnings on strong sales gains for its implantable heart defibrillators. The St. Paul, Minn., medical-device maker also predicted continued growth in 2011. St. Jude’s Cardiac Rhythm Management unit, maker of implantable cardioverter defibrillators, said ICDs sales jumped 16% to $458 million. St. Jude shares were at $41.65 in trading Wednesday.

Health insurers saw their quarterly earnings boosted by a drop in claims, as fewer unemployed Americans sought medical treatments. Insurers also benefited from a late start to flu season. The largest U.S. health insurer, WellPoint Inc. (NYSE: WLP) topped fourth-quarter earnings estimates and predicted earnings growth for 2011. Its shares were at $62.41.

Medicaid-focused insurer Molina Healthcare Inc. (NYSE: MOH) shares jumped Wednesday after it forecast 2011 that topped current analysts expectations and predicted strong premium revenue growth for 2012. The Long Beach, Calif., company’s shares were at $31.41.