When the Dow Jones industrial average first passed 10,000, traders tossed commemorative caps and uncorked champagne. This time around, 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 that 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 10 years.
"It's almost like an announcement that the bear market is over," said Arthur Hogan, the chief market analyst at Jefferies & Co. in Boston. "That is an eye-opener -- ‘Hey, you know what, things must be getting better because the Dow is over 10,000.'"
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.
It was the first time the Dow had touched 10,000 since October 2008, that time on the way down.
"I think there were times when we were in the deep part of the trough there back in the springtime when it felt like we'd never get back to this level," said Bernie McSherry, the senior vice president of strategic initiatives at Cuttone & Co.
Ethan Harris, the head of North America economics at Bank of America Merrill Lynch, described it as a "relief rally that the world is not coming to an end."
The mood was far from the euphoria of March 1999, when the Dow surpassed 10,000 for the first time. Then, the Internet was driving extraordinary gains in productivity, and serious people debated whether there was such a thing as a boom without end.
"If this is a bubble," The Wall Street Journal marveled on its front page, "it sure is hard to pop."
It did pop, of course.
The Dow peaked at 14,164 in October 2007, then lost more than half its value after the financial meltdown last fall. At its low point since then, the average stood at 6,547.05. The breathtaking rally since then brings stocks to roughly break-even for the past 10 years.
So where does the market go from here?
Some market watchers see 10,000 as an illusion because there are still lingering threats to an economic recovery -- rising unemployment, weak consumer spending and a battered housing market.
The investors who have driven stocks higher since March are the pros: hedge funds and institutions whose furious selling hastened the collapse of the market in the first place.
And red flags are showing up in the technical charts that professional investors use as they make their trading decisions. The Dow sits about 18 percent above its average of the past 200 days.
"The market by all technical indicators is completely overbought, just like back in March it was completely oversold," said Rich Hughes, a co-president of Portfolio Management Consultants in Los Angeles.
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