New York The Dow Jones industrial average finally reached new heights Tuesday, extending Wall Street's seven-year recovery with a record closing level after climbing into uncharted territory in trading earlier in the day.
The index of 30 blue chip stocks ended the session at 11,727.34, wiping out the previous record of 11,722.98.
Earlier, the Dow crossed its old trading high of 11,750.28, rising to 11,758.95. Both previous records were set Jan. 14, 2000.
While investors welcomed the Dow's latest achievement, it comes at a time when the stock market is more conservative, even more muted, than the Wall Street of early 2000. Then, investors still were piling exuberantly into high-tech stocks. In 2006, the market's gains come only after investors' careful parsing of economic data and corporate earnings reports.
Tuesday's advance came on the second straight day that oil prices fell sharply, helping to calm fears about inflation and possible interest rate increases. But the market as a whole has been choppy, with traditionally defensive stock sectors such as pharmaceuticals and utilities leading the market higher since its May and June decline, said Doug Johnston, head of U.S. trading at Adams Harkness in Boston.
"I think we break out to the all-time high, then we could get a blow-off correction off of that," Johnston said.
The Dow, whose well-known large-cap stocks include aluminum producer Alcoa Inc., discount retailer Wal-Mart Stores Inc. and the Walt Disney Co., has recovered ahead of the broader Standard & Poor's 500 and the Nasdaq composite index, which also peaked in early 2000. Those indexes were inflated - overinflated in the case of the Nasdaq - by the dot-com bubble.
The S&P 500's high close was 1,527.46, and the index remains more than 12 percent away from that milestone. The Nasdaq is even further off its highs and no one expects it to eclipse its record of 5,048.62 anytime soon.
To reach new highs, the Dow had to recover not only from the high-tech collapse, but also recession and the effects of the Sept. 11, 2001, terror attacks. The stock market was further shaken by corporate scandals at companies including Enron Corp. and WorldCom Inc., and the Dow sank to a five-year closing low of 7,286.27 on Oct. 9, 2002, nearly 38 percent off its record high close.
The market's recovery was helped by more than four years of solid corporate profit growth, and more recently, the Federal Reserve's decision to halt its more than two-year string of interest rate hikes.