Dow hits a new one-year high
Should you start singing, "Happy Days Are Here Again"?
Not yet, but it is encouraging news for investors that earlier today the Dow hit a new one-year high.
In midday trading, the Dow is trading at 10,728, up nearly four-tenths of 1 percent on the day. Earlier today, the Dow briefly touched 10,734, topping its previous 52-week high of 10,729, set back in January, before it retreated slightly.
The broader S&P 500 and the tech-heavy Nasdaq also are trading higher on the day. The Nasdaq has hit an 18-month high today.
This is an important milepost for the Dow, which is made up of 30 blue-chip stocks, just as it was when the Dow broke back up through the 10,000 mark last fall.
As even casual investors know, the markets thrive on confidence and can become self-perpetuating machines. Small bits of optimism can snowball into big rallies, and the opposite is true, as well.
Tracking the Dow over the past year, we see a strong climb up off the March 9, 2009, bottom, followed by a summer swoon, followed by a reset rally that continued until about November when, despite some peaks and valleys, the Dow has moved mostly sideways. In early February, following a short trough, the Dow began a steady climb.
Why has the Dow surged? Today, it was likely pushed up through its previous one-year high by yesterday's news out of the Fed that it would keep interest rates low for at least six more months. Loose money is good for the markets, though not for long-term debt and inflation. But the markets care mostly about today.
Recently, the Dow has been climbing with this modest, soft recovery. Plenty of bears are worried about a coming downturn, or "correction," unless something can be done to significantly eat into the nation's very high unemployment rate, which stands at 9.7 percent and is expected to hover near 10 percent through at least the rest of the year.
For ordinary investors and soon-to-be retirees, we know that when we look at our 401(k)s and our stock portfolios, we're still only about 75 percent back to where we were when the Dow peaked at more than 14,000 in October 2007. It's foolish to expect another big rally like we saw off the March 9, 2009, bottom, but investors would be pleased if the Dow just kept up its steady, modest progress.
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March 17, 2010; 12:34 PM ET
Categories: The Ticker , Wall Street | Tags: Dow Jones, nasdaq, s&p 500
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