Dow Approaches 10,000

Some good news/bad news on the economic front.

The good news is that the Dow has approached 10,000. The bad news is that retail sales are still lousy.

The good news:

Stocks rallied Wednesday morning, with the Dow industrials nearly hitting the 10,000 level for the first time in a year, following better-than-expected quarterly profit reports from Intel and JPMorgan Chase.

The Dow Jones industrial average (INDU) gained 116 points, or 1.2%, to 9987, almost 2 hours into the session. The blue-chip average had risen as high as 9991.68 before stepping back slightly.

The last time the Dow crossed 10,000 during a trading session was Oct. 7, 2008, when it briefly touched 10,124.03

The S&P 500 (SPX) index rose 13 points or 1.2% and the Nasdaq composite (COMP) added 23 points or 1.1%.

The bad news:

Retail sales fell in September after a popular program aimed at boosting auto sales ended, but the drop was smaller than economists had expected, government data showed Wednesday.

The Commerce Department said total retail sales fell 1.5% last month, down sharply from an increase of 2.7% in August, when overall sales were boosted by the government’s Cash for Clunker’s program.

Economists surveyed by Briefing.com had forecast a decline of 2.1% in September sales.

Sales excluding autos and auto parts rose 0.5%, compared to a 1.1% increase in August. Economists expected a gain of 0.2% in September sales, excluding auto purchases.

Consumer confidence growing. The stronger-than-expected gain in sales outside the auto industry suggests that consumers are gradually becoming more confident as the U.S. economy emerges from a deep recession.

“Today’s report is broadly reflective of what we’re seeing in other areas of the economy, and that is a slow and gradual recovery,” said Tim Quinlan, an economist at Wells Fargo.

In general it looks like it will be a s-l-o-w recovery…particularly with jobs loss persisting as a national problem (and notable problem for Democrats heading into 2010).

  

10 Comments

  1. Interesting…the dow jumps and financial institutions do well while unemployment goes up and we still have another round of home morgage foreclosers and a pending commericial real estate crisis.

  2. People assume the government will bail them out again.

  3. Wall Street does not equal the economy any more that the blackjack tables in Reno do. Contrary to what many if not most think stock trades don't contribute capitol to the economy unless they are issues of new paper. The rest is little more than gambling.

  4. Excellent Ron
    Gambling. And taking $ out at high. Re-upping when low. Simpler than theft.

  5. True, but the stock market should reflect the realities of our economy because the value of those companies is tied to the economy. I agree, the stock market is no different than playing poker, it isn't all luck.

  6. I disagree that the stock market reflects the realities of our economy – the table is fixed. Companies will do what is necessary to drive up stock prices in the short term in part because the salaries of the executives are tied to the stock price. These short term actions are frequently bad for both the company and the economy in the long term which is one of the reasons we are in this mess now.. Government intervention all too often is also about the health of Wall Street rather than the health of the economy.

  7. I think Ron's right on this one, shannonlee.

  8. The stock market is the betting table of investors. As such, it “tends” towards being a leading indicator. Except in the case of severe bubbles, it tends to drop before the majority of the main economic indicators show the weaknesses, and rises prior to their recovery.

    However, this time I have to admit that I don't see any indication of an imminent economic recover. In fact, there are a lot of indicators that really point strongly for years of stagnant to worse economic conditions ahead.

  9. On many levels, I definitely agree with what's being said here about the stock market being a poker table. I just know that my awesome winnings on that table over the last couple of days are going part into finishing my IRA contributions for the year and part into savings, but a good half is going into a new wardrobe and a new iPod and a new mattress and likely a few fancy dinners. Since my guess is that I'm not the only one to come out a winner here, this uptick could certainly have an effect on consumer spending and, in turn, jobs.

  10. True…I yield….to a point ;)

    Large companies like JP can drive these kinds of Dow spikes regardless of the state of the economy…so yes, Ron is right. But these kinds of spikes are very worrisome because of some of the things I mentioned in my first post. It feels like another building bubble that is not at all based in reality.

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