Dow soars to new closing high of 11,727

The Dow Jones industrial average finally reached new heights Tuesday, extending Wall Street's seven-year recovery with a record closing level after climbing into uncharted territory in trading earlier in the day. The index of 30 blue chip stocks ended the session at 11,727.34, wiping out the previous record of 11,722.98. Earlier, the Dow crossed its old trading high of 11,750.28, rising up to 11,758.95. Both of the previous records were set Jan. 14, 2000.

The Dow has recovered ahead of the broader Standard & Poor's 500 and the Nasdaq composite index, which also peaked in early 2000. Those indexes were inflated - overinflated in the case of the Nasdaq - by the dot-com bubble. The S&P 500's high close was 1,527.46, and the index remains more than 12% away from that milestone. The Nasdaq is even further off its highs and no one expects it to eclipse its record of 5,048.62 any time soon.

The market's recovery was helped by more than four years of solid corporate profit growth, and more recently, the Federal Reserve's decision to halt its more than two-year string of interest rate hikes. The decline in oil prices was the catalyst of the day. A barrel of light crude settled at $58.68, down $2.35, on the New York Mercantile Exchange. Oil prices have had a stunning fall from their intraday high for the year of $78.40 a barrel, reached in July. "When oil and gold start to back off, that's a sign that the economy is slowing and inflation is not a fear," said Joseph Sunderman, vice president of research and development, Schaeffer's Investment Research in Cincinnati.

- The Dow reaching record highs amidst a slowing economy? Hmm. Look at the long-term chart above. It looks like a classic double top forming. Another 2-3 years, and it could go below 5000, easy. What do I think? Sell!! LOL. Anyway that's my personal interpretation, not intended to be investment advice, bla bla ... :)

(2006-10-04 12:33:43 SGT) [Biz] Permalink

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