US markets pushed tantalizingly close to new records this week, a stunning rebound after the steep crash of 2008 wiped trillions of US dollars from Americans’ pocketbooks and retirement accounts.
The thrust past the 14,000-mark made by the Dow Jones Industrial Average on Friday — the first time that level has been seen since Oct. 17, 2007 — underscored the spectacular recovery US stocks have made despite slow growth.
Helped by interest rates still at all-time lows and US companies still building earnings steadily, analysts said the Dow and the S&P 500 could easily find their way past their all-time highs in the coming month, if not sooner.
Both set fresh post-2007 records on Friday, rising more than 1 percent for the day on data that, on one hand showed that the US jobs market remains firm, but on the other hand was not strong enough to push the US Federal Reserve to tighten monetary policy.
The Dow closed on Friday at 14,009.79, still shy of the Oct. 9, 2007 record of 14,164.53.
The S&P 500 reached 1,513.17, its best close since Dec. 10, 2007 and just 3.4 percent shy of the Oct. 9, 2007 all-time high of 1,565.15.
The NASDAQ Composite, at 3,179.10, was still far below its record, hit in March 2000 before the dot-com crash.
Even so, and despite sagging Apple Inc shares, the tech-weighted index was just a few points shy of its post-2000 high reached in October last year.
All three benchmarks have now more than doubled since hitting their post-crash bottoms in 2009, rewarding the patient investors who hung on in the middle of the economic crisis.
Analysts said that the re-entry to the market of domestic and foreign investors who sat out is supporting the current surge.
“Since the 2007 levels, it has been a tremendous rally,” Marblehead Asset Management Mace Blicksilver said.
Also driving the gains have been quarterly reports: Most companies reporting in the past two weeks have shown firm profit growth, if not as fast as a year earlier.
The macroeconomic picture also looks encouraging. The US government’s estimate this week that the economy shrank at a 0.1 percent pace in the fourth quarter was brushed off as an anomaly, including by the Fed itself, which blamed it on “transitory factors.”
The economy would return to modest growth, the Fed said — though not by enough for it to raise interest rates.
The jobs data released on Friday both confirmed the economy’s modest strength — last year’s monthly job creation numbers were revised upward by 18 percent — and the still slow pace of growth — last month’s jobs were 13 percent down from last year’s pace.
Economists remain uncertain about whether growth will pick up pace this year from last year’s 2.2 percent. Some worry that consumer spending might weaken and business investment would slip.
Another factor is the political battle over the US deficit.
This week, Democrats and Republicans appeared still far apart on a compromise that would avoid sharp budget cuts programmed for the end of next month.
The cuts, US$110 billion for this year alone, could pull down overall growth.