Dow surges to record high and keeps going

Dow surges to record ... and keeps going

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By STEVE ROTHWELL
AP Business Writer
NEW YORK (AP) —

The Dow closed at an all-time high Tuesday, beating the previous record it set in October 2007, before the financial crisis and Great Recession.

The Dow Jones industrial average closed at 14,253.77, up 125.95 points, or 0.89 percent. The index jumped from the opening bell, climbed as much as 158 points early and peaked at 14,286.

Twenty seven stocks in the 30-member Dow advanced, with industrial companies leading the gains.

The gains represent a remarkable comeback for the stock market. The Dow has more than doubled since falling to a low of 6,547 in March 2009 following the financial crisis and the onset of the Great Recession. Stocks have rebounded sharply since then, helped by stimulus from the Federal Reserve, even as the economic recovery has been slow and steady.

“Whether they want to admit it or not, everyone is very impressed with the resilience of the market,” said Alec Young, a global equity strategist at S&P Capital IQ.

The last time the Dow was this high, Apple had just sold its first iPhone and George W. Bush had another year as president. The U.S. housing market had yet to bottom, and the financial crisis that brought down Lehman Brothers was still a year away.

The recovery in stocks may even have been quicker had memories of the financial system’s near-collapse not been on investors’ minds, said Robert Pavlik, chief market strategist at Banyan Partners.

“It’s still pretty close to the front of people’s brains,” he said. “That’s one of the reasons that people are hesitant to invest in the stock market.”

That could be changing. More money has been flowing into stock mutual funds since the beginning of the year.

Now, investors who have missed out on the run-up may be deciding to get off the sidelines, Pavlik said.

The Dow opened higher Tuesday following a surge in markets across the globe. China’s markets rose after the government said it would support ambitious growth targets. European markets jumped following a surprisingly strong rise in retail sales across the 17-country group that uses the euro. In the U.S., more hopeful news about housing kept the momentum going.

Even with stocks trading at, or close to, record levels, they are still a good investment because earnings have risen so much, says Darell Krasnoff, Managing Director at Bel Air investment Advisors.

“People get overly focused on benchmarks,” he said. “The fact that it’s reached that level is an interesting landmark, but it doesn’t say anything about whether the market is over-, or under-valued.”