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Archive for Thursday, October 15, 2009

Dow closes above 10,000 for first time in a year

October 15, 2009

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— When the Dow Jones industrial average first passed 10,000, traders tossed commemorative caps and uncorked champagne. This time around, the feeling was more like relief.

The best-known barometer of the stock market entered five-figure territory again Wednesday, the most visible sign yet that investors believe the economy is clawing its way back from the worst downturn since the Depression.

The milestone caps a stunning 53 percent comeback for the Dow since early March, when stocks were at their lowest levels in more than a decade.

“It’s almost like an announcement that the bear market is over,” said Arthur Hogan, chief market analyst at Jefferies & Co. in Boston. “That is an eye-opener — ‘Hey, you know what, things must be getting better because the Dow is over 10,000.’”

Cheers went up briefly when the Dow eclipsed the milestone in the early afternoon, during a daylong rally driven by encouraging earnings reports from Intel Corp. and JPMorgan Chase & Co. The average closed at 10,015.86, up 144.80 points.

It was the first time the Dow had touched 10,000 since October 2008, that time on the way down.

“I think there were times when we were in the deep part of the trough there back in the springtime when it felt like we’d never get back to this level,” said Bernie McSherry, senior vice president of strategic initiatives at Cuttone & Co.

Ethan Harris, head of North America economics at Bank of America Merrill Lynch, described it as a “relief rally that the world is not coming to an end.”

The mood was far from the euphoria of March 1999, when the Dow surpassed 10,000 for the first time. The Internet then was driving extraordinary gains in productivity, and serious people debated whether there was such a thing as a boom without end.

“If this is a bubble,” The Wall Street Journal marveled on its front page, “it sure is hard to pop.”

It did pop, of course. And then came the lost decade.

The Dow peaked at 14,164.53 in October 2007, then lost more than half its value after the financial meltdown last fall. At its low point, the average stood at 6,547.05. The breathtaking rally since then brings stocks to roughly break-even for the past 10 years.

On Wednesday, the Dow rose 144.80, or 1.5 percent, to 10,015.86, its biggest gain since Aug. 21 and highest close since Oct. 3 last year. Broader indexes also climbed to 2009 highs. The Standard & Poor’s 500 index rose 18.83, or 1.8 percent, to 1,092.02. The index, the basis of many mutual funds, is up 61.4 percent from a 12-year low in March.

The Nasdaq composite index rose 32.34, or 1.5 percent, to 2,172.23. It’s up 71.2 percent since March.

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