New York It looks like cause for celebration: The Dow Jones industrial average surged from 12,000 to 13,000 in just six months. But appearances can be deceiving, and there may be more reason to worry than rejoice about Wall Street's latest accomplishment.
Stronger-than-expected profits from several large companies helped push the stock market to historical heights. But many big corporations, including the Dow components, made a chunk of that money overseas, where economies are growing faster than in the United States. And many of the same worries that weighed on investors earlier in the year remain: rising energy costs, a slumping housing market and a possible credit crunch.
Still, the stock market's best-known indicator swept past its latest milestone shortly after trading began Wednesday, and even made it past 13,100, rising as high as 13,107.45. The Dow, which has risen in 18 of the past 20 sessions and gained more than 780 points in that time, closed at 13,089.89, up 135.95, or 1.05 percent. It was the Dow's 35th record close since the start of October.
It took the Dow just 129 trading days, since Oct. 18, to make the trek from 12,000 to 13,000, far less than the 7 1/2 years the blue chips took to go from 11,000 to 12,000. The swiftness of this latest trip does recall the days of the dot-com boom when the major indexes were soaring and it took the Dow a mere 24 days to barrel from 10,000 to 11,000.
The Dow climbed to a record this time as many of the country's biggest companies surpassed analysts' first-quarter earnings projections. Among those beating forecasts and advancing Wednesday: soft-drink maker PepsiCo Inc., materials manufacturer Corning Inc. and Dow component Boeing Co.
About two-thirds of U.S. companies so far have reported earnings that were in line with or higher than analyst expectations, said Jim Herrick, director of equity trading at Baird & Co.
"We've had pockets of companies report better earnings, and in light of the Fed not appearing to raise rates anytime soon, that bodes well for the market," said Herrick, referring to the Federal Reserve.
Investors have been encouraged by stable earnings growth, which shows U.S. companies are faring well despite a slow economy. A large reason why corporate growth has held up is strength in international sales; PepsiCo Inc., for one, said Wednesday its overall profit rose 16 percent, despite a drop in operating profit at its North America unit.