It was just a number on a board, but it was enough to raise the hopes of some investors and cause others concern about an overheated market. And it brought reminders of a different era, back before the financial crisis rocked the world economy.
The Dow Jones industrial average, a stock market index that is traditionally considered a benchmark for how the entire market is faring, had been rising fairly steadily for about a month. On Friday, strong auto sales and optimism about U.S. job growth pushed it over the mark. The Dow is now just 155 points away from its record close.
“There’s a newfound enthusiasm for the equity market,” said Jim Russell, regional investment director at U.S. Bank Wealth Management in Minneapolis.
But market watchers were divided over what the Dow milestone — or even what a potential new all-time high — really means. To some, it’s an important booster to hearts and minds, making investors feel optimistic and thus more willing to bet on the market.
“The Dow touching 14,000, it matters psychologically,” said Peter Cardillo, chief market economist at Rockwell Global Capital in New York. “It attracts smaller investors.”
And those investors, until recently, had been shying away from stocks. Since April 2011, investors have pulled more cash out of U.S. stock mutual funds than they’ve put in, according to the Investment Company Institute. In the past three weeks, though, that trend has reversed, which could make January the first month in nearly two years where stock-focused funds had a net inflow.
The last time the Dow closed that mark was Oct. 12, 2007, when it settled at 14,093.08. It had reached its all-time record, 14,164.53, three days before that.
For the average investor, that was all back when the stock market still seemed like a party. Housing prices were starting to ebb but hadn’t cratered. Jobs were abundant, with unemployment at 4.7 percent — compared to 7.9 percent now. Lehman Brothers still existed. So did Bear Stearns, Wachovia and Washington Mutual.
The Dow ended Friday 149.21 points higher to 14,009.79. The other indexes were also up. The S&P 500 rose 15.06 to 1,513.17. The Nasdaq composite index was up 36.97 to 3,179.10.
Auto sales helped. Toyota, Ford, GM and Chrysler all reported double-digit gains for January.
The government jobs report that pushed stocks forward was mixed, but traders chose to focus on the positive. The U.S. said it added 157,000 jobs in January, which was in line with expectations. Unemployment inched up to 7.9 percent from 7.8 percent in December. Many economists, though, were encouraged because the government now says that hiring over the past year was higher than originally thought.
The jobs number is based on a survey of employers. The unemployment rate is based on a separate survey of households, which is why they can diverge.
Among Stocks Making Big Moves:
- Drugmaker Merck fell more than 3 percent, down $1.42 to $41.83. Its fourth-quarter profit suffered because of competition from generic medicines against its blockbuster allergy drug Singulair.
- Insurance company MetLife rose more than 2 percent, up 86 cents to $38.20, after saying it plans to buy the largest private pension fund administrator in Chile.
- Zoetis, an animal health business that Pfizer just spun off, made its debut on the stock market. It shot up 19 percent, rising $5.01 to $31.01.