Welcome to Money Morning - Only the News You Can Profit From.
Private Briefingwith WILLIAM PATALON III, Executive Editor
Not a member yet? Right now you can get immediate access to Money Morning’s Private Briefing for only $7.99. Click here to get started now.
Click here to get immediate access - for only $7.99.
Members log in:
Not a member yet? Sign up here or learn more.
Chief Investment Strategist
20-year seasoned market analyst and professional trader with highly accurate track record. Specialty in Asian markets.
Global Energy Strategist
35-year expert in oil and gas policy, risk assessment, and emerging market economic development.
Global Investing Specialist
30-year merchant banker, math- ematician, and author. Has a knack for being bearish at exactly the right time.
Capital Wave Strategist
30-year CBOE trader, market maker, and retired hedge fund honcho. Helped launch the Volatility Index in 1993.
20-year commodity guru and portfolio advisor. Top authority on metals + mining stocks. Head- quartered in Canada.
Defense + Tech Specialist
30-year veteran of tech markets with a Rolodex of Silicon Valley CEOs. Pulitzer nominee. Uncovered rare earths crisis.
30-year veteran analyst of business, economics, and financial markets. Award-winning author of "Contrarian Investing."
The Dow Jones Industrial Average was at a record high after nearly six years, as the stock market today (Tuesday) rallied enough to push the index up nearly 70 points at the open.
Just minutes after the opening bell, the Dow sailed passed its all-time high of 14,165 hit on Oct. 9, 2007. Less than a half-hour into the trading session the Dow roared higher by triple digits propelling benchmark to yet another record.
By 1 p.m. the Dow was up 146.99, or 1.04%, at 14,274.81. The Standard & Poor's 500 Index added 17.32 or 1.14%, to 1,542.52, leaving it in striking distance if its record close of 1,565 hit in 2007. The Nasdaq climbed 43.39 or 1.37% to 3,225.42.
Money has poured into stocks over the last several months as individuals have begun to feel more comfortable about the health of the economy - but can it last?
"The question is, can the Dow maintain these levels? The market is interested in risk-that's why the Dow is higher, why the riskier currencies are higher," Matthew Lifson, currency trader at Cambridge Mercantile Group in Princeton told Reuters.
After the Dow peaked in October 2007, the benchmark went on to lose more than half its value over the next 15 months. The culprits six years ago were the bursting housing bubble, the financial system meltdown and the Eurozone sovereign debt crisis.
Since then, a main cushion for the Dow has been support from the U.S. Federal Reserve.
The central bank has pumped more than $3 trillion of monetary stimulus into the anemic U.S. economy since the Great Recession. It also handed out some $1 trillion in bailout loans to save a bevy of banks, insurance giants and auto makers.
For the time being, the Fed is committed to its stimulus programs.
"The Federal Reserve is here, and is going to do everything possible to support this recovery," Fed Chief Ben Bernanke recently told CBS's "60 Minutes."
"So long as the Fed is in an accommodative mode and the economy is out of recession, the odds are that you will have a bull market," David Rosenberg, chief economist at Gluskin Sheff and Associates told The New York Times.
And as long as investors believe the Fed's got their backs, they're more likely to put money into the market.
But a wide gap remains between what stocks and the economy are telling us. A lot of uncertainty still looms, and that may be a deterrent.
Caution is warranted about the direction of the Dow, and here's why.
(After submitting your email address the page will refresh with the full article. You will receive a welcome email from Money Morning including the benefits of your free subscription.)