Dow industrial average closes at new all-time high
NEW YORK -- The Dow Jones industrial average vaulted to a record closing high Tuesday, finishing at a new high-water mark for the first time in more than five years.
The Dow rocketed up 125.95 points Tuesday, or 0.9%, to 14,253.77, marking a major milestone in the blue-chip index’s recovery since the stock market hit bottom in March 2009 in the wake of the global financial crisis.
The Dow’s previous highest close was 14,164.53 on Oct. 9, 2007, on the eve of the worst economic downturn since the Great Depression.
JOIN A LIVE VIDEO DISCUSSION at 2:30 p.m.
“It’s nice to see, and it’s nice to see confidence coming back to the market,” said Alan Whitman, managing director in Morgan Stanley’s wealth management division in Pasadena. He said the market’s latest ascent reflected a measure of optimism in corporate earnings and in the economies of the U.S., Asia and Europe.
Still, he added, the Dow’s new record is merely a number.
“Psychologically I think it’s very important for a lot of people,” he said. But he added: “We can’t get overly enthused just because of it.”
It’s been a long, if halting, rally since the financial crisis threw the world’s economy into chaos and sent the stock market plunging.
Since then, unemployment has slowly declined. Corporate balance sheets have gained strength. Banks have shored up capital and the housing market has finally begun to show signs of recovery.
The Federal Reserve, though repeated rounds of monetary stimulus programs, has pumped billions upon billions into the American economy. Central banks around the world have done the same, keeping interest rates at historic lows.
At the same time, the Fed’s policies have left investors few places to put their savings to earn significant returns. As a result, stocks have rallied as investors, searching for yields higher than they could get from bonds or bank accounts, have turned to riskier assets.
“People are desperate for income,” said Erik Davidson, deputy chief investment officer and executive vice president at Wells Fargo’s Private Bank.
The rally has helped many investors overcome the shell shock of the market’s steep decline in late 2008 and early 2009, he said.
They’ve had plenty of reasons to worry about the possibility of another sharp decline, including fiscal dysfunction in Washington, the European debt crisis and slowing growth in China, Davidson said. But such fears haven’t come to fruition.
“People have been very concerned about things that might go bump in the night,” Davidson said in a recent interview. “It doesn’t mean that things are great. … It continues to be less worse than people have been fearing.”
Join us for a live video chat at 2:30 p.m. on the Dow. Deputy Business Editor Joe Bel Bruno and reporters Walter Hamilton and Andrew Tangel will field your questions and comments. Click back here to join in on the conversation.
ALSO:
TSA to allow small knives, sporting gear on planes
New York, Maryland workers top survey of long commutes
IRS will pay whistle-blowers less because of federal budget cuts
