Window dressing moves Dow over 12,500 mark

NEW YORK » Wall Street surged higher yesterday, hurtling the Dow Jones industrials past 12,500 for the first time as year-end bargain hunters picked up stocks across a variety of sectors.

The auto industry was in focus after a meeting between executives at Toyota Motor Corp. and Ford Motor Co. sparked hope about a potential alliance between the two rivals. Shares of both companies moved higher on the speculation.

Further takeover activity lent support to the overall market after McClatchy Co. announced late Tuesday it agreed to sell the Star Tribune newspaper in Minneapolis to a private equity fund. Also, graphics communication company Cenveo Inc. agreed to buy rival Cadmus Communications Corp.

But investors looking to buff up their portfolios by year's end were behind most of the gains after major indexes languished last week.

"What you're seeing is window dressing, people want to finish up the year looking like they own the best names," said Philip S. Dow, managing director of equity strategy at RBC Dain Rauscher. "And for those that missed the market, they're trying to put their cash to work and play catch-up. You've got momentum on your side this year."

The session was again marked by thin volume typical of the week between Christmas and New Year's. The New York Stock Exchange began the session with two minutes of silence as a tribute to President Gerald Ford, while the Nasdaq Stock Market had a similar observance later in the morning.

The Dow rose 102.94, or 0.83 percent, to a closing record of 12,510.57. The index hit a record trading level of 12,519.22 earlier in the session.

Broader stock indicators also advanced. The Standard & Poor's 500 index was up 9.94, or 0.70 percent, at 1,426.84, and the Nasdaq composite index rose 17.71, or 0.73 percent, to 2,431.22.

The two-day advance leaves major indexes heading toward double-digit gains for the year. The Dow is now up 16.7 percent this year, while the Nasdaq has risen 10.2 percent and the S&P 500 is up 14.3 percent.

A Commerce Department report that showed new home sales rose more than expected in November sent bonds lower; many investors are hoping that signs of economic weakness will motivate the Federal Reserve to lower interest rates, so this sign of strength was troublesome for bondholders. The yield on the benchmark 10-year Treasury note rose to 4.65 percent from 4.6 percent late Tuesday.