Dow Inches Closer to 12,000

Wall Street extended its record-setting advance Monday, sending the Dow Jones industrial average within a whisper of 12,000 as investors grew more optimistic that corporate profits would remain robust amid a slowing economy.

The blue-chip index was less than 3 points away from reaching the milestone for the first time, then fell back minutes before the close. It still managed a fresh record-high finish, its seventh in two weeks.

A deluge of earnings reports, including 12 from Dow component companies slated this week, could make or break the Dow’s run at record levels.

The Dow closed up 20.09 points, or 0.2%, at 11,980.60. Broader stock indicators also advanced. The Standard & Poor’s 500 index rose 3.43 points, or 0.3%, to 1,369.05 and the Nasdaq composite index rose 6.55 points, or 0.3%, to 2,363.84.

The advance came despite a sharp rise in energy prices, with natural gas posting its biggest rise since July. Light, sweet crude closed up $1.37 at $59.94 in New York.

Although the overall market has been going up along with the Dow, a trend that points to investors’ rising optimism, analysts said the blue chips’ record highs also showed some need for safety.

“People are arguing at what pace and severity the economy is slowing,” said J. Michael Barron, chief executive of Knott Capital. “Those are markets where traditional big-cap stocks tend to outperform. I think the underlying reason the Dow is moving higher is that people are uncertain as to what’s happening right now, and the safer bet is to go with global brands.”

But Michael Sheldon, chief market strategist at Spencer Clarke, said the Dow’s rise benefited the rest of the market.

“The biggest impact from the Dow is that it starts to increase investor interest in equities in general, and we might see more investors that have been waiting on the sidelines put money to work in the market,” he said.

Yields on U.S. Treasury notes were little changed, stabilizing after a sell-off in recent weeks when investors trimmed bets on interest rate cuts next year. Treasury yields fall as their prices rise.

Federal Reserve officials making appearances during the day had little effect on trade. Chairman Ben S. Bernanke steered clear of comments on the economy, while the market took in stride a warning by St. Louis Fed President William Poole that inflation needed to be contained.

Even a surprisingly strong regional manufacturing report only briefly troubled Treasuries, since the fall in prices Friday that pushed benchmark yields to three-week highs left the market well-positioned for firmer data.

“I would say it’s consolidating a bit after last week’s sell-off,” said David Ader, Treasury market strategist at RBS Greenwich Capital in Greenwich, Conn.

The yield on the benchmark 10-year U.S. Treasury note fell to 4.78%, from 4.80% on Friday.

In other market highlights:

* Energy shares climbed 2.2% for the biggest advance among the S&P; 500’s industry indexes. Exxon Mobil added $1.43 to $69.83 after crude had its first three-session advance since August. Anadarko Petroleum, an oil and natural-gas producer, gained $1.80 to $45.62.

* As a group, raw-materials shares had the second-best performance in the S&P; 500, up 0.8% as prices for copper and other commodities climbed.

Alcoa, whose third-quarter profit report last week missed analysts’ estimates, added 68 cents to $27.32. Prudential raised its rating on the shares to “overweight” from “neutral,” citing higher prices for aluminum.

U.S. Steel jumped $2.50 to $67.94 on speculation that it would be a takeover target. JPMorgan Securities Inc. analyst Michael Gambardella said the shares might reach $100 because they didn’t yet reflect potential improvements in U.S. Steel’s earnings capability, Barron’s reported.

* Allegheny Technologies added $2.18 to $76.44. Boeing, the world’s second-largest maker of commercial airliners, agreed to buy about $2.5 billion in titanium products from Allegheny to ensure a supply of a key metal for its jetliners.

* Ratings downgrades sent shares of Home Depot and General Electric lower.

Home Depot retreated 55 cents to $36.35. The home-improvement retailer was cut to “neutral” from “buy” at Goldman Sachs after the resignations of the head of Home Depot stores and the head of merchandising. Their departures may signal “a retail team that is increasingly stretched” and threaten sales and earnings, analyst Matthew Fassler wrote.

GE fell 42 cents to $35.56. Merrill Lynch lowered shares to “neutral” from “buy.” The stock may fail to rise much further as investors who bought it expecting a steeper economic slowdown consider selling now, analyst John Inch wrote. “There could be risk to GE’s future estimates,” he said.

* UnitedHealth Group fell after it reported Sunday that Chief Executive William McGuire would leave the company by Dec. 1 under scrutiny over backdated stock options. Shares fell $1.21, or 2.5%, to $47.54.