Dow (Flirting with) (Breaks Briefly) Closes above 10,000

[Sphere]

http://newsvote.bbc.co.uk/1/shared/f.../2/default.stm

The Dow is currently within 20 points of the purely physcological mark of 10,000. If the Dow broke 10,000 would it mean anything? When do people expect it to pass 10,000?

Personally, I think it will break 10,000 at somepoint this week or next during trading, but there will be a sell-off, and it won't actually close above 10,000.

I think it will be 2 weeks before we actually see it close above 10,000


Updates:
9997 as of 1:30 NY time
10,001
9,991

[OneArmedScissor]

This literally means nothing for 99% of Americans.

[B-DizL]

So the Dow has reached 10000 for the first time in a year, does this signal the beginning of a real comeback in the economy?

Also do you think this would have happened so soon if Obama hadnt given the bailout?

SOURCE

Spoiler Alert, click show to read: 

Oct. 14 (Bloomberg) -- U.S. stocks rallied, sending the Dow Jones Industrial Average above 10,000 for the first time in a year, on better-than-estimated earnings at JPMorgan Chase & Co. and Intel Corp. Oil climbed, while the Dollar Index slid to the lowest level since August 2008 and Treasuries fell.

JPMorgan added 3.3 percent as a surge in fixed-income revenue helped the bank increase profit almost sevenfold. Intel, the world’s largest chipmaker, rose 1.7 percent after its sales forecast topped estimates by as much as $1 billion. Macy’s Inc. and Nordstrom Inc. gained on a government report that showed retail sales fell less than economists forecast last month.

The Dow jumped 144.8 points, or 1.5 percent, to 10,015.86 at 4:08 p.m. in New York. The Standard & Poor’s 500 Index increased 1.8 percent to a one-year high of 1,092.02, with financial and technology shares leading gains. The MSCI World Index of 23 developed countries added 1.8 percent.

“Intel and JPMorgan are two major bellwethers, so if the most significant semiconductor company and the most significant bank are blowing out their numbers and guiding higher, that has a positive implication for the entire economy,” said Philip Orlando, who helps oversee $400 billion as chief equity market strategist at Federated Investors Inc. in New York.

The Dow’s rally above 10,000 was led by banks and erases about half the damage done since the gauge soared to a record two years ago. More gains may depend on meeting profit estimates that call for per-share earnings among the 30 companies in the average to rise 22 percent next year and 18 percent in 2011, according to data compiled by Bloomberg.

[♔Jean-Luc Picard♔]

I think it would have happened sooner if there had been no bailout. Sometimes companies go out of business. That's capitalism. The government should never have bailed anyone out. I may very well be wrong, but that's just my take on the whole situation.

[I Heart Romans]

I think it would have happened sooner if there had been no bailout. Sometimes companies go out of business. That's capitalism. The government should never have bailed anyone out. I may very well be wrong, but that's just my take on the whole situation.

I think it would of took a bit longer for the economy to pick up if the banks were just left to go bust, there would be no money moving in the system!

[uzi716]

Holy crap I have spent so much time on these forums that I actually thought you mean DOW as in Decleration of War......I was like wait what the hell is he talking about?

[B-DizL]

Holy crap I have spent so much time on these forums that I actually thought you mean DOW as in Decleration of War......I was like wait what the hell is he talking about?

you need to get out more man

[Sphere]

I think it would have happened sooner if there had been no bailout. Sometimes companies go out of business. That's capitalism. The government should never have bailed anyone out. I may very well be wrong, but that's just my take on the whole situation.

To be frank, under zero inflation conditions (which we have had for about a year now) the government dumping cash into the financial sector, or any industry is going to improve short term growth. The problems it causes are long term as the government has to service the debt, prevent inflation and then there is the whole moral hazard issue.

[jankren]

Obama yeah!

[FuZe]

So the Dow has reached 10000 for the first time in a year, does this signal the beginning of a real comeback in the economy?

Possibly, but I'm not so sure. This rally appears to be another correcting bounce, led primarily by financials. Equities were overbought, then oversold, now probably again overbought. (Like a 15 year-old flying an airplane) Stocks are usually the leading indicator, but they are speculative and can swing in ways that defy reason. Employment and real estate values are generally better economic indicators, but they are trailing indicators which can only be read in the context of several years after the fact. There are a couple more shoes ready to drop, most notably the consumer credit market and certain private equity firms that are holding on only by the skin of their noses.

Also do you think this would have happened so soon if Obama hadnt given the bailout?

Probably not, just as I think this wouldn't have happened if the previous administration hadn't given a bailout either. We were on the verge of a deflationary spiral that would have brought capitalism to a crawl resulting in profitable businesses downsizing for lack of credit, depressed assets, destruction of capital, and millions more lost jobs.

The stock market alone (especially in the short-run) is not a very accurate indicator of overall economic health and one should take care not to rely solely on it for judgment of public policy, good or bad.

[B-DizL]

@ FuZe

Well theres this quote from the article i posted...

“Intel and JPMorgan are two major bellwethers, so if the most significant semiconductor company and the most significant bank are blowing out their numbers and guiding higher, that has a positive implication for the entire economy,” said Philip Orlando, who helps oversee $400 billion as chief equity market strategist at Federated Investors Inc. in New York.

[Sphere]

Actually about 75% of the adult population and 50% of US households have some investments in the stock-market.


As a final update the Dow closed above 10,000 today. The first time it has in a year.

[FuZe]

Yes, and he is not alone. Financial guys from Kudlow to Cramer are quick to announce that good times are here again. After last year, I'm hesitant to take their crows at face value, for their pronouncements conveniently serve their own interests. Your article mentions that rally was led by banks. The problem is that the financial industry is particularly hard to evaluate since they fueled the recent bubbles and are now on taxpayer life-support. They may well be right, (and I sincerely hope that they are) but it takes more than a few good months of stock numbers to make a good economy.

[Sphere]

Keep in mind, the Q3 GDP growth is expected to be between 3-4% annualized (Bernake and Greenspan have confirmed this) so the US economy is out of recession. The question is what the recovery is going to look like; v shaped, double dip, long and slow? As the stock market is a leading indicator, it might be of some help.

[Ahlerich]

Keep in mind, the Q3 GDP growth is expected to be between 3-4% annualized (Bernake and Greenspan have confirmed this) so the US economy is out of recession. The question is what the recovery is going to look like; v shaped, double dip, long and slow? As the stock market is a leading indicator, it might be of some help.

cant be sure about that. the growth is artificial through the stimulus. one will have to see if the economy is strong enough to grow on its own once the stimuli effects are used up.

[Justice and Mercy]

cant be sure about that. the growth is artificial through the stimulus. one will have to see if the economy is strong enough to grow on its own once the stimuli effects are used up.

Drug addicts are never capable of sustaining the high once the drugs wear off.

EDIT: By the way, the DOW hit 12,000 under Bush. It clearly isn't the sole sign of a growing, stable economy.

Also, the devalued dollar means the DOW needs to be nominally larger to mean the same thing it did a few years ago.