The Dow Jones Industrial Average stock index, one of the most widely watched barometers of the U.S. economy, jumped nearly 1 percent Tuesday to crush its previous record and set an all-time high closing of 14,253.77.
The day's gains for the blue chip index of 30 large industrial stocks marked a complete victory for a rally that began in March 2009 and more than recouped the 54 percent drop in the Dow's average as a result of the subprime meltdown and resulting Great Recession of 2007 to early 2009.
The former record for the Dow, which was created in 1896 and originally had 12 stocks, was 14,164, a record that had been set on Oct. 9, 2007.
"It really does represent an achievement that we have climbed out of this crater," Jack Ablin, chief investment officer at Chicago's BMO Private Bank, which manages about $66 billion, told the Wall Street Journal.
The investor optimism that lifted equities Tuesday stemmed from a host of upbeat developments: a strong U.S. service sector report, increased domestic factory activity, higher spending by U.S. businesses and consumers, a recovery in the nation's housing market, the Federal Reserve's intention to stay its course of easy money into at least 2015, and word this week that China's new government vowed to maintain the growth rate of the world's second-largest economy.
“People are now starting to realize that it is a bull market,” Laszlo Birinyi, president of Birinyi Associates Inc. in Westport, Conn., said on Bloomberg Radio’s “Surveillance” with Tom Keene and Michael McKee. “It’s not going to come back, you’ve missed the train, and the train still has a long way to go. But you better get on it.”
The broader S&P 500 also surged, closing at 1,539.79, close to its record high close of 1,565.15 set on Oct. 9, 2007 and a five-year high.
Some Wall Street experts voiced caution about the duration of the current record-setting bull market.
"We have a pretty strong market; the economy seems to be taking advantage of a low interest-rate environment. What happens when this QE3 kind of evaporates or goes away? That's the major question in the back of my mind," Anthony Conroy, head trader at BNY ConvergEx, an affiliate of the Bank of New York, said to Reuters, referring to the U.S. central banks latest round of monetary easing.
Mike Obel works as Senior Editor, Copy Chief. Before that he was Markets Editor, assigning, editing and writing about business, markets, finance and economics. Before coming...