You can forgive investors for shrugging at the sight of the Dow Jones industrial average crossing the 10,000-point mark yesterday. Aside from the fact that the 30-member index is not representative of the U.S. stock market, or that psychological thresholds are really just round numbers, investors have seen Dow 10,000 more times than they can probably remember.
If the level deserves any attention, it's because it now serves as a vivid reminder of how the U.S. stock market has drifted sideways over the past decade. A recap:
The Dow rose above 10,000 for the first time in its venerable history on March 29, 1999. Although it didn't have a lot of exposure to technology names beyond Hewlett-Packard Co. and United Technologies Corp. (Microsoft Corp. and Intel Corp. were added later in the year), it nonetheless benefited from the dot-com boom that sent stocks soaring worldwide. The new level fed dreams about future thresholds. Among the more notorious, James Glassman's Dow 36,000: The New Strategy for Profiting from the Coming Ri se in the Stock Market predicted that 10,000 was just the beginning.
It wasn't, of course. The Dow crossed 10,000 on the upside eight more times by 2002, after the bursting of the dot-com bubble and the start of a brief U.S. recession - not to mention the 2001 terrorist attacks - sent the index retreating to a low of 7,286 by October, 2002.
That decline led to a classic V-shaped recovery in both the economy and the stock market, after the U.S. Federal Reserve Board cut interest rates drastically, also inflating a bubble in the U.S. housing market. On Dec. 11, 2003, the Dow crossed 10,000 again, marking a 37-per-cent rise from its 2002 low.
However, there were four more attempts to break the 10,000-point barrier in 2003 and 2004 before the Dow at last seemed to put the threshold in its rear-view mirror. After moving above 10,000 on Oct. 27, 2004, the Dow moved to a peak of 14,164.53 on Oct. 9, 2007. The housing market was strong, consumer spending was robust and the global economy was purring. What could go wrong?
Plenty, it turns out. The ensuing financial crisis and global recession seriously wounded American International Group Inc., General Motors Corp. and Citigroup Inc., all of which were booted out of the Dow by June, 2009. The index passed through the 10,000-point mark on the downside on Oct. 6, 2008, and didn't stop there. It touched a low of 6,547 on March 9 - marking a 12-year low.
Still, there's nothing that co-ordinated moves by the world's central banks can't solve. Ultralow interest rates helped feed a rebound in corporate profits that sent the Dow back above 10,000 on Oct. 14, 2009. But the index has struggled since then, moving above the threshold another five times by yesterday.
Some investors may be dizzy. Others will simply notice that the 10,000-point level exerts a strong gravitational pull.
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