Dow Jones Reclaims 10,000 Milestone

Key Index Closes above Barrier for First Time in More Than a Year, Capping a Stunning 53% Comeback Since March

(CBS/AP)  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 and JPMorgan Chase. 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 historic rebound has been led by the once-battered bank stocks, reports CBS News correspondent Anthony Mason. Bank of America is up almost 400 percent since March, Citigroup is up 375 percent, and American Express is up 230 percent.

When the Dow first broke 10,000 back in March of 1999, veteran trader Art Cashin broke out his rally cap. New caps were printed up for today, Mason reports.

"The downside of it is it reminds people that for ten years we've basically gone nowhere," Cashin said.

Indeed, the mood was far from the euphoria of 1999. 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 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.

So where does the market go from here?

Some market watchers see 10,000 as an illusion because there are still lingering threats to an economic recovery - rising unemployment, weak consumer spending and a battered housing market.

Investors like Scott Shaffer, manager of an electronics company in Dallas, are still wary, reports Mason.

"I'm not sure that we can look at just one number, this run up to the magical 10,000 and think, 'wow, everything is fine,' because that really is not the case," he said.

The investors who have driven stocks higher since March are the pros: hedge funds and institutions whose furious selling hastened the collapse of the market in the first place.

And red flags are showing up in the technical charts that professional investors use as they make their trading decisions. The Dow sits about 18 percent above its average of the past 200 days.

"The market by all technical indicators is completely overbought, just like back in March it was completely oversold," said Rich Hughes, co-president of Portfolio Management Consultants in Los Angeles.

On the other hand, Wall Street analysts say 10,000 is more than just a number - it can have legitimate psychological implications.

A recovering stock market soothes the psyche as people watch their portfolios and 401(k) retirement accounts being replenished. And if people start spending again, that may persuade more investors, including some reluctant pros, to go back into the market.

"Psychology plays a huge role in investing, so when you're trying to overcome the huge levels of panic and fear that we've seen over the last year, psychology shouldn't be discounted," said Carl Beck, a partner at Harris Financial Group.

Many investors, especially individuals, are afraid they'll put money into the market only to watch it disappear if stocks plunge again. It's happened before: In 1975, stocks rose 53 percent in less than four months after a recession. Then they lost 11 percent before climbing again in early 1976.

If stocks follow historical patterns, they could be nearing their peak. Assuming the recession technically ended this summer, as many economists believe, the Dow's surge since March puts it near where past rebounds have started to fade.

On top of that, there are still plenty of problems that could trip up the market. Companies posted better-than-expected earnings in the second quarter, but mostly because of cost-cutting, not the sales increases needed to keep growing.

Individual investors remain cautious. In August, well into the rally, they put $11 into bond funds for every dollar they put into stock funds, according to the Investment Company Institute, the mutual fund trade group.

But they appear to slowly be coming back to stocks. Retail brokerage TD Ameritrade reported an average of 431,000 trades a day in August, up from barely more than 300,000 when the market was sliding in January and February.

If the market can hold Wednesday's milestone, investors should grow even more confident.

"It wouldn't surprise me if it made Joe Main Street more comfortable," David Kelson, portfolio manager of Talon Asset Management in Chicago.

[wmsshields]

It's all Bush's fault.

[spaceatoms]

Obama has no where to go one this one, he inherited a war and a bad economy, and has Wall Street back on track, you can't say that he has done a bad job and has even criticized Wall Street. Having that in hand, the next trick would be to put people back to work which is almost impossible to do unless the game changes and it won't be as good as the 90's where prices were lower. So the underlying issues are still there and having a hamburger cost 2.00 more isn't the answer with the automobile industry in ruins and a country at war on several fronts. One idea would be to merge with Iraq and Iran and take their resources and have a prescence overseas in the middle east, a permenant one!

[searingtruth]

How curious.

A stuck thread.
ST


"The care of human life and happiness, and not their destruction, is the first and only legitimate object of good government."
Thomas Jefferson, letter to The Republican Citizens of Washington County, Maryland, March 31, 1809

A Future of the Brave

[searingtruth]

Nothing that caused our economic collapse has changed, or has remedied its misdirection.
ST


"The greatest persuader is the ever encroaching power of truth."
SearingTruth

A Future of the Brave

[searingtruth]

"Nothing for the poor.
Because they have been negligent and irresponsible.

Everything for the billionaires.
Because they have been negligent and irresponsible."
SearingTruth

A Future of the Brave

[searingtruth]

As I have often said, when you give trillions of dollars to billionaires they will prosper.

While the people suffer.
ST


"Truth is defined by the weakest of us who must suffer through it."
SearingTruth

A Future of the Brave

[SocietysNightmare]

Dow Jones Reclaims 10,000 Milestone ..... And?!! The economy is still in the toilet.

[rhs648]

The truth is the economy is in the toilet for some people. There are many people earning a lot of money. Each of us has to do what it takes to be one of them. The alternative is to be on the losing side.

[southwerk]

Today the Dow passed the 10,000 mark. Many saw this as a sign of improvement. Nothing could be further from the truth. The stock market has only the most tenuous contact with reality. Oh yes, bank profits are strong after the taxpayers gave them trillions of dollars in bailout money. But what is the larger economy doing? Nothing has been done to stop the high risk activities of investments firms. The same juvenile decision making that nearly destroyed the financial structure of the United States continues unabated. Unemployment is at a disastrous level. Current statistics have it at 10 percent. This is wishful thinking. The government?s measure of unemployment is heavily modified by many factors to soften the impact. The real unemployment rate is around 16 percent. Local banks across the nation face bad loans of at least 900 billion dollars. This is not going to get better. There are more losses in store. The bleed of continuous foreclosures continue. If this were not bad enough, the weakness of dozens of countries? economic bleeds into ours, just as our mistakes damaged so many of them.

So, what is the stock market celebrating? We are at the edge of calamity bedeviled by the same factors that so damaged the economy in 2008. No rules have been changed. There only need to be a catalyst to bring the structure down. I sincerely hope that these traders are lucky and we as a nation come out okay. But their conduct, their incredible self confidence and hubris do not bode well for our future.

http://southwerk.wordpress.com/2009/10/15/dow-hits-ten-thousand/

[roach9703]

Don't worry the suckers will come.

[voxpopulus]

The people who aren't suckers were buying stocks six months ago. And I bet you weren't one of them.

[retiredgustav]

My wife and I did and we are laughing all the way to the bank!

[ubrew12]

Gosh, either stocks are valuable, or money is cheap.

I wonder which it is...

[armyoftwelve]

Gee...now only half of my stock portfolio is worthless.

[voxpopulus]

The only way half of anyone's stock portfolio should be worthless is if they bought in entirely at the height of the market or were leveraging.

That's not very bright is it?

[roach9703]

Money is cheap but stocks are faster.

[hungry1968-16]

by GGrimaldi October 14, 2009 6:48 PM EDT
Please go take an economics class, it would help you understand the difference between earned money, and investment money so you can understand why it is taxed the way it is.

You can never understand the concept can you Hungry, that these people singularly pay hundreds of $millions of taxes...one individual.

While you pay 2 cents on the dollar you earn. Does that seem fair for the privilege of living in the same country with the same privileges?






So I should be taxed at 28%, and the ultra-wealthy should be taxed at 15% OR LESS, and you consider that "fair"?

You tell me to go take an economics class, and you don't even understand the elementary school concept of "less than", "greater than", and "equal to"?

Laughable!!!

[hungry1968-16]

You are too, too funny!!

I have a job, I make money, I own my house, I own my own car, I PAY MY TAXES, I have health care insurance.....

But NONE of that matters. What matters is that someone makes MORE than me, therefore I should be perfectly happy paying MORE taxes per dollar than they do.




And then you have the balls to claim that the democrats cost the jobs in America?!?! Tell me, what did the democrats do in 2007 or 2008, that caused all of the jobs to leave the country?!?! You don't think that Bush URGING companies to "offshore" to help the "global economy" had something to do with it?!?!




And sorry, but I haven't collected on the EIC since 1990, because I make TOO MUCH MONEY.

Keep guessing boy, you aren't even close.

[curse914]

@GGrimaldi

Keep that myth ever relevant by repeating that a "self made man" is possible (if you ignore the laborers who got him there).

A Captain of Industry does not employ anyone out of the goodness of his heart, he needs those laborers as much as they need a wage.

[roach9703]

We need to change the tax code and rely more on consumption taxes.
Use a flax rate with high exemptions for those who support dependents. The tax rate should be 22%

[hungry1968-16]

by jxknowles October 14, 2009 6:47 PM EDT
Yes, great news, hooray. Now let's get to the real issue and get people back to work, start manufacturing and creating a strong economy.






That's a pipe dream. I wish it weren't, and I would love to see us turn BACK into a strong manufacturing country, but big business has turned their backs on America, and shipped all of the good paying manufacturing jobs overseas.

It'll be virtually impossible to get them back, unless we impose HUGE tariffs on importers, and that's not likely to happen anytime soon.

[roach9703]

Big business will fall, and due to advances in computer technology, new, smaller manufacturers will emerge as long a the government does not screw up by providing corporate welfare to losers.

[breadline1]

the rich get richer and the rest of us take it in the behind. such is life. being rich is for life. going to hell is for eternity. hope you rich folks enjoy both.

[bubbadubba]

Now the DOW breaking 10,000 just makes my day.
I could not be happier for all the Wall Street tycoons and banks that got bailed out by the government, used the money to buy stocks, and are now wealthier than ever.
Yes, I am truly a happy man.

[pensacola8-2009]

The confidence in the market has returned. Obama has done it!!!

I applaud the faithful investors who take their business to the markets.

I anticipate more gains as time passes!!

Obama / Biden rock solid!!!

[jxknowles]

Yes, great news, hooray. Now let's get to the real issue and get people back to work, start manufacturing and creating a strong economy.

[Turbidite]

After the public taxes have been infused into the private investment market we now have a short-term bubble of faux value in the stock markets.The investment managers will now take huge bonuses for their wonderful non-work, while the bonuses should be returned to the U.S. Treasury. Once again Wall Street has found another way of picking the public's pocket.

[roach9703]

Watch out, this is now a sucker's market. There are good investments. But the pickings are much leaner.

[John_Merritt]

Seeing that the Dow was predicted to be between 30-40K as of 5 years ago by many in the know, I would say this is a good start. Hopefully investors, including Mom and Pop, will be able to see there are reasons America is great and will continue as long as we work together collectively.

It is when one element of people try to adversely influence the people or steer things in a direction that is counter productive of what we stand for, than we tend to get ourselves into trouble. "Now is the time for all men to come to the aid of their country". Don't know where that quote comes from, but it has never been truer than today.

When we lose sight of our intended purpose as a nation, surely the nation will fail and sometimes inevitably fall. We are all here to see that does not happen, and may God continue to bless this great country. Amen.

[roach9703]

The markets of the last ten years have been largely emotional. Maybe we the field of financial psychiatry.

[bradkt1]

This is good political news for the Obama Administration. While there is still a long way to go with the economy, I can't see how this is good political news for conservatives in any way.

I believe that this is a major sign that investor confidence is returning. Yes, corporations cut a lot of costs by cutting jobs, but that by itself would not have so dramatically affected the stock prices like we have seen since they hit their low point not quite a year ago. Investor confidence goes hand in hand with good market fundamentals and has always been the key in the stock market.

[melchg07]

Precisely

[roach9703]

With all those watered stocks that Uncle Sam owns, maybe we can have an LBO by the Chinese

[retiredgustav]

Like it or not, Main Street always follows Wall Street.

[hungry1968-16]

by Marc_1986 October 14, 2009 4:12 PM EDT
@hungry

If you want to get into the specifics of why Warren Buffett pays a smaller percentage of income taxes we can. Since Buffet declares his earnings as capital gains from selling stock and real estate, he is being taxed at an effectively lower level ON HIS INVESTMENTS... To compare a tax on return of investments to salary paid by employers is complete poppycock.






Money earned, is money earned.

It SHOULD NOT matter HOW you earned the money.

The biggest problem with this, is that the people that make the most money like Buffet, Gates, Forbes, Bloomberg, etc, can buy political favor, and pay a smaller percentage of their money in income taxes.

Whether it's capital gains from selling stocks or property or a laborers paycheck, the money should be taxed at the same rate.

[spaceatoms]

sky, you can believe all you want and read all the history in the world, but the bottom line is I don't care about consumption and globalization, there are enough jobs in India and China to put every working american out of a job. The best thing would have been a conservative stance and have the DOW go down to around 3000, have interest rates go back up to 15 percent to stop the derivatives,and then have it stay there for a few years while the country rounded up the horses and organized itself again moving Buffet and Gates to the back burner and bringing in some new ideas from the youthful society. Gates made all his brilliant ideas in his 20's, right now, I don't see any young entrepenurers on the scence and so we are just stuck paying more for the same, I paid over 5.00 today for a BigMac!

[spaceatoms]

sky, you can believe all you want and read all the history in the world, but the bottom line is I don't care about consumption and globalization, there are enough jobs in India and China to put every working american out of a job. The best thing would have been a conservative stance and have the DOW go down to around 3000, have interest rates go back up to 15 percent to stop the derivatives,and then have it stay there for a few years while the country rounded up the horses and organized itself again moving Buffet and Gates to the back burner and bringing in some new ideas from the youthful society. Gates made all his brilliant ideas in his 20's, right now, I don't see any young entrepenurers on the scence and so we are just stuck paying more for the same, I paid over 5.00 today for a BigMac!

[isthatso-2009]

Whoop-Di-Doo! It's nothing but more of the same manipulation that caused the collapse of the stock market to begin with. No investment has taken place by real long-term investors, no value has been generated by the Fortune 500 companies, nothing has been done to actually create an increase in stock value and pricing. All that is happened is speculators buying at 8am for x and selling at 8:15am for x + (a little more), then rinse and repeat the whole day long. Nice going to all of the sheep who have placed their money into this giant fraud. You too will feel the wrath of destruction soon enough when they wipe you out and try to claim it wasn't their fault. Nothing has changed! Nothing.

[uradufuss]

I don't care how the markets are doing, I'll never invest another penny in stocks again --ever!; and anyone who does is a total boob! Nothing has changed, people. You can still be manipulated by insider trading, and all kinds of other re-defined mis-dealings. The vulchers are still out there circling; and they still want your money --will you just hand it over to them again this time?