Dow slips back below 12,000 mark

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The Dow Jones industrial average rose 8.25 points to close at 11,985.4

The Dow Jones industrial average broke through 12,000 for the first time in two and a half years but slipped lower in afternoon trading.

The index of 30 prominent US companies finished with a modest gain.

Weak profit forecasts from Boeing and Xerox weighed on the market. Boeing fell 3% after saying its 2011 profits would be hurt by production delays. Xerox fell 8% after saying its profit margins were not increasing.

The Dow gained 8.25 points, or 0.1%, to close at 11,985.4. The last time the Dow closed above 12,000 was on June 19 2008. The Standard and Poor’s 500 index rose 5.45, or 0.4%, to 1,296.63. The Nasdaq composite index jumped 20.25, or 0.7%, to 2,739.50.

Energy and materials companies gained more than 2%, the most among the 10 company groups that make up the S&P 500 index.

Investors were pleased with President Barack Obama’s calls for lower tax rates on businesses during the State of the Union address late on Tuesday, said Jack Ablin, chief investment officer at Harris Private Bank. “If he can take steps to simplify the tax codes, be it for individuals or corporations, I think it would be a lot easier to do business,” Mr Ablin said.

The Federal Reserve said it was not making any changes to its 600 billion dollar bond-buying programme. The plan is meant to encourage borrowing by keeping interest rates low.

The Commerce Department said new home purchases rose 17.5% in December compared with November. Despite the strong one-month jump, new home sales for all of 2010 fell to the lowest level on records going back 47 years.

Eastman Kodak fell 18%. The company’s income fell 95% on weaker revenue from its camera business and lower royalties from digital imaging.

The yield on the 10-year Treasury note rose to 3.41% from 3.34%. Two stocks rose for every one that fell on the New York Stock Exchange. Volume came to 1.2 billion shares.

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