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At the open: Dow hits highest level in history

The Dow Jones industrial average bolted to its highest level in history, as traders continued to bid up stocks on the belief that global economies were on a strong enough path to support the continuation of the five-year bull market.

The Dow opened higher and has been steadily gaining since; by 1022 a.m. (ET), it was up 130 points, or 0.9 per cent, at 14,259. The Dow's record closing high was 14,164.53, set on Oct. 9, 2007. Two days later, it hit its highest intraday level of 14,198.10 - now surpassed.

The broader S&P 500 index was still shy of its record high of 1,565.15, however. In early trade, it was up 14 points, or 0.9 per cent, at 1,539.

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In Canada, the S&P/TSX composite index was up 92 points, or 0.7 per cent, at 12,799. That was its highest level since Feb. 8, but a far cry from the record high of 15,073 it hit in June 2008. Canada's market has significantly underperformed U.S. indexes over the past year, weighed down by a downturn in commodity prices.

There wasn't a lot of fresh news to account for the move into record territory for the Dow today - but there was also little in the way of negative factors to spoil sentiment. Stocks have been rallying this year on the belief that equities are more attractively valued than other assets, and loose monetary policy across the globe has inspired traders to take bets on riskier assets. The recently concluded fourth-quarter earnings season continued to provide evidence of a healthy corporate sector, with close to 70 per cent of companies beating analysts' estimates.

European stock markets are up sharply today, led by a 1.9 per cent rally in Germany's DAX and a 2-per-cent gain in Italy's main stock index - which had tumbled last week on inconclusive election results. The European gains were fed by optimism created by Wall Street's late advances on Monday and data from the euro zone and the U.K. this morning showing a little improvement in the services sector.

Asian markets were mostly higher overnight. China led the gains, with the Shanghai composite index gaining 2.3 per cent, rebounding from Monday's selloff that was sparked by new restrictions imposed on its housing sector. China's parliament began its annual session today, kicked off by outgoing Premier Wen Jiabao projecting an economic growth target of 7.5 per cent for 2013 - which met expectations.

In the U.S., there continues to be little political momentum to block the $85-billion (U.S.) in spending cuts that are taking hold this month - the so-called sequester. But market players aren't too worried, believing that progress on that topic will eventually be made when talks on the debt ceiling and other budgetary affairs take place later this year.

The bigger fear may very well be whether stocks are getting overvalued or not. The bull market in U.S. equities is entering its fifth year this month, and the S&P 500 index has risen 125 per cent since 2009.

Among stocks moving on news today was Bank of Nova Scotia, which modestly beat earnings expectations in its latest quarter. The stock opened up about 1 per cent.

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About the Author
Investment Editor

Darcy Keith is The Globe and Mail's Investment Editor. He has been a business journalist since 1992 and joined the Report on Business in 2010 from Yahoo! Canada, where he was the senior editor of finance. More


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