The Dow has closed above the 10,000 mark for the first time his year and the first time since since Oct. 3, 2008. The index is still 30% below its peak but it is still an upbeat feeling for investors to see the Dow climb from below 7,000 to back above 10,000.
Like a magnet, Dow 10,000 has emerged as a financial force of nature that attracts and repels stock investors during thrilling bouts of profit-induced euphoria and depressing journeys into money-losing despair. The Dow Jones industrials may climb above 14,000. Perform a 15,000 tease. Or plunge to 6500. But ever since its maiden voyage to 10,000 on March 29, 1999, the 113-year-old stock index with the blue-chip pedigree always seems to end up back at the same place: Dow 10,000.
The market closed Wednesday with the Dow up 145 points to 10,016, its first time above 10,000 in a year. The fact that the Dow, a financial icon with a global following, is again north of that key level is significant because seven months ago it was feeling the full brunt of the financial crisis and trading below 7000 – a 12-year low and 53.8% off its October 2007 record of 14,164.53.
The big question is "What Now?" Investors are hoping the Dow stays about the 10,000 mark but it is certainly possible that it could slip right back below 10,000. Dennis Berman talked to Fox Business about what the market milestone means for investors. As Berman says the number looks good from 6,500 but not so good from 14,000. Take a look:
The Dow soared to a new high this week. It climbed 377 points, or 4%, for the week to close at 9864.94.
The Dow climbed four of five sessions this week and ended up 4% over that period, snapping a two-week losing skid.
The market's gains this week have been driven by a promising start to the earnings season from Alcoa, whose shares gained 10% since Monday, and a move by the Reserve Bank of Australia to tighten its key interest rate. Many investors interpreted that move as a sign that the global economy is returning to normalcy following last year's meltdown.
"Much of the earnings we are going to see will depend on the global economy," said Jordan Smyth, a managing director for Edgemoor Investment Advisors. "It seems everyone now expects earnings will continue to exceed expectations and we'll be looking for confirmation that businesses are seeing what we think we're seeing in the economy."
If the Dow climbs to 10,000 that still leaves the index around 30% down from its high point. Even so, many investors will be relieved to see that number again. The stock market seems to indicate the economy is out of the woods but there are still troubling indicators out there in housing, retail and unemployment.
The stock market turned a solid performance after months of news lows and uncertainy. It wasn't double digit growth but the main indexes Dow, Nasdaq and S&P each climbed greater than 7% during July.
Dow +8.4%
Nasdaq +7.8%
S&P 500 +7.4%
The Wall Street Journalreports that July, 2009 was the best monthly performance for the Dow since October, 2002. Overall the Dow is still over 35% below its peak but at least investors have some renewed confidence seeing the Dow back above 9,000. For the rally to continue we are going to need some good earnings reports and a lack of scary economic figures that cause stocks to trend southward again.
GM and Citigroup Removed From Dow Jones Industrial Average
Bloomberg reports that General Motors Corp. and Citigroup Inc. have been removed from the Dow Jones Industrial Average and replaced by Cisco Systems Inc. and Travelers Cos.
GM, which filed for bankruptcy protection today, and Citigroup, the recipient of $45 billion in taxpayer aid, became the first companies since American International Group Inc. in September to leave the 30-stock average. Their shares have lost more than 90 percent since the start of 2007.
By replacing GM with Cisco, Dow Jones & Co. has removed automakers from the best-known benchmark for U.S. stocks, saying in an e-mailed statement that computers are as central to the economy as cars were in the previous century. Citigroup, until last year the world’s biggest financial firm by assets, is being replaced by a company it jettisoned in 2002 and that was once run by its former chairman, Sanford "Sandy" Weill.
"This announcement brings front and center the challenges facing the U.S. economy as it strives to remain competitive," said Alan Gayle, director of asset allocation at Ridgeworth Investments, which manages $60 billion in Richmond, Virginia. "The Dow Jones Industrial Average is becoming less of an industrial average. It's trying to reflect the broader economy."
GM's shares recently fell below the 75 cent mark and Citigroup has traded below $5 a share since mid-January.
The Federal Reserve said today that the pace of the economic attraction is slowing. The Federal Reserve says that interest rates will remain exceptionally low to ensure recovery. The Fed said this despite the fact that the GDP fell 6.1% in the first quarter. The outbreak of swine flu is a new wild card that makes the economic future somewhat unpredictable. There's also no sign that jobs or housing prices are starting to recover. These facts make the Fed's optimism seem premature.
Stocks have rebounded lately. The Dow is back above 700 and the S&P is closer to 800 than 700. It was just two weeks ago when analysts were discussing the possibility of the market heading below 6,000. A Wall Street Journalarticle discussed the possibility of the Dow sinking below 5,000 or the S&P going below 500 with several analysts saying it was possible.
While Silvant sees the S&P staying in a range of 650 to 750, a decline to 500 is "definitely possible," Mr. Guinther says.
A level of 500 on the S&P is "possible, but I wouldn't put it in the realm of probable," says Thomas Lee, chief U.S. equity strategist at J.P. Morgan. Mr. Lee on March 2 removed a tentative "buy" recommendation he had placed on the S&P in February.
For Mr. Lee, the S&P at 500 "would imply that we are now in a period similar to April 1932 -- the final stages of a bear market."
Between April 8, 1932, and July 8, 1932, stocks fell 34% -- a little more than what it would take to get the S&P to 500.
A level of 500 would take declines for the S&P to 68% since its October 2007 high, compared with the peak-to-trough depression-era slump of almost 90%.
It's certainly possible the stock market could see lows again. We haven't really had any sectors reporting positive growth that would kick the market out of its bearish cycle.
The Dow and S&P 500 have falled to levels not seen since the 1990s. It's the Dow's lowest close since May 1997. Both the Dow and S&P 500 lost over 3% as they plunged to new lows. The Nasdaq lost nearly 4% on the day. Concern about the strength of the economy continues to drive stocks downward. Here's a look at the numbers for today.
Little Rally on Final Day of Trading Does Little to Modify 2008's Huge Losses
Markets closed up for the final trading session of the year. The Dow climbed 108 points and the Nasdaq rose 26 points. The positive end to the year did little to change the overall pattern of 2008 which was the worst year for the Dow since 1931.
A year ago the stock market was at a healthy 14,164.53. Today the story is much different. The DOW is down about 40% from its high a year ago. That is a lot of value lost in this terrible bear market.
Today was another down day. The DOW fell over 650 points and the Nasdaq fell over 95 points. It went under 9,000 and just kept falling.
Dow: 8,579.19 -678.91 (-7.33%)
Nasdaq: 1,645.12 -95.21 (-5.47%)
S&P 500: 909.92 -75.02 (-7.62%)
GM was one of the big losers today. GM shares were down over 30% on the day.
This graphic from Marketwatch tells the story of the huge difference for investors between today and one year ago.
Here's a Wallstrip video about whether or not you can bear the recent economic downturn. This was recorded back in August before the stock market became even more unbearable.
Today's stock market was almost a complete reversal of what occurred on Monday. The DOW climbed over 260 points and the Nasdaq rose over 55 points. Each index was up about 2.5% on the day.
U.S. stocks staged a solid rally Tuesday to more than recoup the prior day's steep losses, as consumer confidence rose and crude prices declined, offering some respite to ongoing concerns about the economy.
"These are good things and when you combine that with relatively low rates, maybe we can be happy at least one day this week," said Kevin Giddis, managing director, Morgan Keegan & Co.
The major stock indexes built on gains to end at or near session highs after data showing a better-than-forecast rise in consumer confidence and the price of crude fell nearly $4 a barrel.
The main reason for the optimism today was the fact that oil prices fell again. Oil closed at $122.19 a barrel on the New York Mercantile Exchange. It was a two-month low for oil as Reuters reports in the video below. If oil were to continue falling maybe the market could sustain something longer than a single day rally.
Concern over Fannie Mae and Freddie Mac combined with rising oil prices has helped push the Dow below the 11,000 mark for the first time in over two years. Shares of Fannie Mae and Freddie Mac have plunged nearly 50% today. The AP reports that investors were not impressed with remarks by Treasury Secretary Henry Paulson. Some investors were hoping for a government bailout.
Investors seemed unimpressed by a statement from Treasury Secretary Henry Paulson, who said the government's focus is ensuring that Fannie Mae and Freddie Mac remain as presently constituted to carry out their mission.
The government-chartered companies at times each lost more than 40 percent on growing speculation that a government bailout is needed. A collapse of the two financiers would cause further shock to the financial system, and trigger more losses to banks and brokerages with significant holdings of mortgage-backed securities.
The troubles at Fannie Mae and Freddie Mac are just the latest depressing turn in a year-old credit crisis that shows no sign of ending, disappointing stock traders who just months ago who thought the worst was perhaps over.
The Dow fell as low as this morning 10,980.37. The last date the Dow traded below 11,000 was on July 25, 2006. Since falling below the 11,000 mark the Dow has climbed back just barely above it again.
Oil prices also remain near record highs. Concern that Israel may launch an attack on Iran are helping to boost oil prices.
The DOW fell for the fourth straight day. It was down over 40 points. However, the NASDAQ managed to eek out a gain thanks to comments made by Cisco CEO John Chambers. With articles like this one mentioning the threat of stagflation it isn't surprising to see stocks falling.
The stock markets ended on a very sour note as concerns about a recession accelerated. The Dow fell 246 points to 12,606. The S&P 500 lost 19 points to 1,401. The Nasdaq fell 48 points to close at 2,439. Marketwatch reports that the Dow industrials are down 558 points in 8-day run and the Nasdaq is off 8% since year began.
Those expecting the bullish Dow market to keep climbing may have been surprised a little by the first quarter of 2007. The Dow ended the first quarter down 0.9%. Marketwatch notes that this was the Dow's first quarterly decline since the second quarter of 2005.
For the quarter, the blue-chip average sits on a loss of 0.9%, its first quarterly decline since the second quarter of 2005.
The Dow first rose by over 65 points in morning trade Friday, before falling by over 100 points and then recovering some ground in the afternoon.
"Near-term, there are too many uncertainties," said Owen Fitzpatrick, head of the U.S. equity group at Deutsche Bank. "There are a lot of issues that aren't resolved about the housing market, subprime mortgages and geopolitical tensions."
Stocks have been rocked since late February amid mounting concerns that a meltdown in the subprime mortgage market will spread, restricting lending, cramping consumption and further weakening a slowing U.S. economy.
"The market is going to be in choppy waters, at least for the next couple of months," said Fitzpatrick. Next week, the market will be on the lookout for negative announcements from companies forced to ratchet down earnings outlooks, "given the weakness that we've already seen in the economy," he said.
The Nasdaq faired much better and had a 0.3% increase during the first quarter.
The stock market turned a solid performance after months of news lows and uncertainy. It wasn't double digit growth but the main indexes Dow, Nasdaq and S&P each climbed greater than 7% during July.
Bloomberg 
Concern over Fannie Mae and Freddie Mac combined with rising oil prices has helped push the Dow below the 11,000 mark for the first time in over two years. Shares of Fannie Mae and Freddie Mac have 