The New York Stock Exchange as seen on October 5. Driven by IBM, the blue-chip Dow Jones industrial average broke the 12,000-point barrier before retreating in trading on the NYSE yesterday. - reuters

NEW YORK, United (Reuters):

The Dow industrials stormed through the 12,000 level for the first time on Wednesday as strong earnings from technology bell-wether IBM renewed investors' confidence in corporate profit outlook.

Meanwhile, the dollar rose and bonds changed little on news that U.S. housing starts rose and inflation remained moderate in September.

The data reinforced the view the Federal Reserve would leave interest rates unchanged at its October policy meeting and probably for the rest of the year.

For U.S. equities, though, the story was all about the strength of blue-chip profits, most notably figures late Tuesday from International Business Machines Corp.

Following IBM's stronger-than-expected quarterly earnings report, the computer services company's shares jumped more than 5 per cent as trading opened on Wednesday. That carried the Dow Jones industrial average through the 12,000 mark within a minute of the opening bell.

Round numbers on the Dow

Jane Caron, chief economic strategist at Dwight Asset Management, in Burlington, Vermont, said round numbers on the Dow "always have some significance" because they "capture the attention of the average investor" who might not have been active in equities recently.

By midday, however, the Dow had retreated to just under that mark and IBM shares were up 4.5 per cent.

The Dow closed up 42.10 points, or 0.35 per cent, at 11,992.20. The Standard & Poor's 500 Index was up 2.23 points, or 0.16 per cent, at 1,366.27. The Nasdaq Composite Index was down 3.38 points, or 0.14 per cent, at 2,341.57.

U.S. stocks have risen along with a global equities rally since late summer, with big cap names taking the lead. The Dow is now up 12 per cent year to date, and the S&P 500 is up nearly 10 per cent.

European stocks ended at 1,441.48, up 0.9 per cent. Japan's Nikkei rose 0.25 per cent to 16,653.00.