Dow closes above 10,000 for first time in a year

Stock market barometer

When the Dow Jones industrial average first passed 10,000 a decade ago, traders tossed commemorative caps and uncorked champagne. This time around -- yesterday -- the feeling was more like relief.

The best-known barometer of the stock market entered five-figure territory again yesterday, the most visible sign yet that investors believe the economy is clawing its way back from the worst downturn since the Depression. The milestone caps a stunning 53 percent comeback for the Dow since early March, when stocks were at their lowest levels in more than a decade.

"What you're seeing now is just a follow-through with the equity markets and the financial company reports that things are getting better," said James A. Cox, managing partner of Harris Financial Group in Colonial Heights.

The mood was far from the euphoria of March 1999, when the Dow surpassed 10,000 for the first time. At that time, the Internet was driving extraordinary gains in productivity, and serious people debated whether there was such a thing as a boom without end.

The Dow peaked at 14,164 in October 2007, then lost more than half its value after the meltdown a year ago. At its low, the average hit 6,547.05. The breathtaking rally since then brings stocks to roughly break-even for the past 10 years.

Doug Sandler, chief equity strategist for Chesterfield County-based Riverfront Investment Group, said investors are pushing up stocks because they see encouraging signs that the economy is bouncing back.

"The stock market is an early predictor of bright times ahead," he said.

That confidence is reflected in the fact that investors are feeling comfortable about taking risks again, Sandler said.

While hitting 10,000 is notable, Christopher J. Singleton, managing director of Henrico County-based wealth management firm Kanawha Capital Management LLC, urged caution. "Ten thousand is a nice psychological barrier to surpass, but we have to keep in mind that the Dow is still 30 percent below its October 2007 peak."

Still, Singleton believes that reaching 10,000 is a good sign and shows "the market is anticipating an economic recovery."

Stuart M. Porterfield, managing principal of Advisor PT, a Richmond-based firm that does consulting for financial advisers, said surpassing the 10,000 mark is positive but doesn't mean the economy is out of the woods.

"With the weak dollar, questionable retail sales and the continued weakness in areas like commercial real estate and employment numbers, I think it is best for investors to remain cautiously optimistic," he said.

Cheers went up briefly when the Dow eclipsed the milestone in the early afternoon, during a daylong rally driven by encouraging earnings reports from Intel Corp. and JPMorgan Chase & Co.

The average closed at 10,015.86, up 144.80 points.

Wall Street analysts say 10,000 is more than just a number -- it can have legitimate psychological implications.

A recovering stock market soothes the psyche as people watch their portfolios and 401(k) retirement accounts being replenished. And if people start spending again, that may persuade more investors, including some reluctant pros, to go back into the market.

Harris Financial's Cox said the Dow hitting and even staying above 10,000 does not mean people should jump into the market.

"The absolute number on the [Dow] index is irrelevant," Cox said. "You should not commit dollars or take dollars away based on whatever the number is. You should buy based on valuation."

Staff writers Louis Llovio and Emily C. Dooley and The Associated Press contributed to this report.