Despite everything, the stock market is back at a record high.
The New York Times reported that the Dow Jones industrial average, which measures the performance of 30 blue-chip companies, rose more than 150 points in afternoon trading on Tuesday, surpassing its previous record close of 14,164.53, which it achieved nearly five and a half years ago, as well as its record intraday high, set around the same time, of 14,198.10.
Of course, a few things have happened since October 2007. The housing market collapsed, the financial system went into meltdown, the European Union started to fray and politicians dragged the United States through an on-off-on-again fiscal imbroglio.
But stocks managed to move beyond all that.
Since a low point in March 2009, the Dow Jones index has more than doubled, stunning even the most seasoned stock market watchers.
“What’s amazing about this bull market is that people still don’t think it’s real,” said Richard Bernstein, chief executive of Richard Bernstein Advisors, a money management firm. “We think this could be the biggest bull market of our careers.”
On Tuesday in particular, leading indexes abroad were rising after the Chinese government announced that it would step up spending and European data showed that retail sales there have been stronger than expected.
After the bell sounded at the New York Stock Exchange, stocks were pushed up more after a reading on the service sector in the United States showed that it had risen to its highest level of activity in a year, surprising analysts.
“Given that the service sector accounts for close to 85 percent of the U.S. economy, the strong performance on this index suggests that the overall recovery may be continuing to build on the positive momentum at the end of the year,” said Millan Mulraine, a senior strategist at TD Securities. There are some important caveats to the record, however. The Dow is a rather narrow measure of the stock market, so it can provide a somewhat distorted picture of the market’s performance.
At 1,542.93 points in Tuesday afternoon trading, the much broader Standard & Poor’s 500-stock index was still off its nominal high of 1,565.15, also set in October 2007.
Wall Street is soaring, propelling the Dow Jones industrials up nearly 500 points, as investors get the good news they want on the economy’s biggest problems: banks and housing.
Investors have reignited a two-week rally, cheering the government’s plan to help banks remove bad assets from their books. They’re also pleased with a report showing a surprising increase in existing home sales last month, according to Associated Press.
The stocks of public companies engaged in the RV industry that are traded on major markets rode the rally, enjoying their best day in months.
Winnebago Industries Inc. rose 15.9%, Thor Industries Inc. rose 13.5%, Drew Industries Inc. rose 16.9%, Skyline Corp. rose 10%, Patrick Industries Inc. rose 5.5%, Spartan Motors Inc. rose 8.3% and Flexsteel Industries Inc. rose 1.4%.
Equity LifeStyle Properties Inc., a real estate investment trust that serves the campground industry, rose a whopping $5.50 a share to close up 14.9%.
The Dow closed up more than 497 points, its best day in more than four months.
The Treasury Department’s bad asset cleanup program would tap money from the government’s $700 billion financial rescue fund and also involve help from the Federal Reserve, the Federal Deposit Insurance Corp. and the participation of private investors. The housing report, meanwhile, is overwhelmingly positive because it’s a sign that the glut in homes for sale may be easing.