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Question of the Day
Now that the Dow Jones industrial average has closed above 13,000, an all-time high is in sight — just 1,160 points away. But the coast is not quite clear for the markets or the economy.
The Dow’s final push above the milestone came from a report that Americans feel better about the economy than they have in a year.
But other economic data Tuesday were downright grim: Orders for big-ticket factory goods dropped by the most in three years, mainly because the government withdrew a key tax subsidy. And home prices are stuck at 2002 levels.
“I don’t think 13,000 guarantees 14,000,” said John Manley, chief equity strategist for the Wells Fargo funds group. “I do think there still is a lot of skepticism about the short term.”
The next big test comes March 9, when the government releases the number of jobs added by the country in February and updates the unemployment rate.
For a day, though, Wall Street could savor something it hadn’t seen since May 2008, before the bailouts, bank failures and millions of layoffs of the Great Recession — Dow 13,000.
The Dow last closed above 13,000 on May 19, 2008, almost four months before the fall of the Lehman Brothers investment bank triggered the worst of the financial crisis.
On Tuesday, it just cleared the mark — 13,005.12, up 23.61 points for the day.
“I think it’s a momentous day for investor confidence,” said Jack Ablin, chief investment officer at Harris Private Bank. “What this number implies is that the financial crisis that we were all losing sleep over, it never happened, because now we’re back.”
The milestone comes at a time when Americans are feeling better about the economy than they have in a year. The Conference Board, a private research group, said its consumer confidence index was 70.8 for February, up from 61.5 in January.
The report came out at 10 a.m. and lifted the Dow above 13,000. It stayed there most of the day.
“Two months ago, we were talking about a double-dip recession. Now consumer confidence is growing,” said Ryan Detrick, senior technical strategist for Schaffer’s Investment Research.
He said the Dow’s milestone “wakes up a lot of investors who have missed a lot of this rally.”
The average first pierced 13,000 last Tuesday but fell back by the close. It floated above the milestone again on Friday and Monday, but slipped below both days. A strong rally for stocks this year seemed stalled as worry built on Wall Street about climbing prices for oil and gasoline.
Tuesday’s gain puts the Dow 1,160 points below its all-time high of 14,164.53, set Oct. 9, 2007. The Great Recession began two months later.
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