The Dow crossed five figures in afternoon trading Wednesday, seven months after it hit a 12-year low of 6,547.05 on March 9. The comeback by Wall Street’s best-known indicator is the most visible sign yet that investors believe the economy is indeed recovering from the financial crisis and recession. (October 14, 2009)
NEW YORK - The Dow Jones industrial average has reclaimed 10,000 for the first time in a year.
The Dow closed above five figures Wednesday, seven months after it hit a 12-year low of 6,547.05 on March 9. The comeback by the stock market’s best-known indicator is the most visible sign yet that investors believe the economy is indeed recovering from the financial crisis and recession.
Cheering erupted from traders on the floor of the New York Stock Exchange as stocks briefly moved above the psychological barrier. The Dow at times fell back below 10,000 in the normal ebb and flow of trading.
Upbeat earnings reports from chip maker Intel Corp. and banker JPMorgan Chase & Co. Wednesday gave the Dow its final push past 10,000.
Investors are increasingly shaking off lingering doubts about the economy. However, analysts still warn that problems like rising unemployment and a weak housing market pose a threat to a solid recovery.
The Dow is now up 53 percent from its March low. But it remains 29 percent below its peak of 14,164.53 hit in October 2007.
The index first finished above 10,000 on March 29, 1999, in the midst of a powerful rally that ended with the dot-com bust at the start of this decade. Stocks then fell below that mark last October as investors sold stocks in a feverish panic following the downfall of Lehman Brothers.
The latest round of earnings reports, which will continue to pour in over the next few weeks, are the key to keeping the market’s rally alive, analysts say. If earnings fall short of expectations, stocks could stumble.
JPMorgan Chase, the first major bank to report third-quarter earnings, stoked the market’s optimism as it easily beat Wall Street’s expectations, reporting a profit of $3.59 billion for the July-September period. The bank also achieved record year-to-date revenue.
Investors didn’t seem fazed that JPMorgan, considered one of the strongest financial institutions throughout the financial crisis, doubled the amount of money it set aside during the quarter to cover failed home and credit card loans.
“Better-than-expected is a win,” said Peter Schwartz, principal at Gregory J. Schwartz & Co. “People’s expectations have been calibrated to buffer some of the bad news.”
Intel also beat analysts’ estimates, reporting a smaller-than-expected drop in profits and sales after the market closed Tuesday. The leading chip maker said it expects sales in the final period of the year to top projections, raising hopes that the computer market is improving.
Together, the reports quieted fears that major U.S. companies won’t be able to boost profits through sales growth and not just massive cost-cutting, which was a main driver behind the improvement in second-quarter results.
According to preliminary calculations, the Dow rose 144.80, or 1.47 percent, to 10,015.86. The Standard & Poor’s 500 index rose 18.72, or 1.74 percent, to 1,091.90, and the Nasdaq composite index rose 31.11, or 1.45 percent, to 2,171.00.