It looks like a cause for celebration: The Dow Jones industrial average surged from 12,000 to 13,000 in just six months. But appearances can be deceiving, and there may be more reason to worry rather than rejoice about Wall Street's accomplishment.
Stronger-than-expected profits from several large firms helped push the stock market to historic heights. But many big corporations, including the Dow components, made a chunk of that money overseas, where economies are growing faster than in the US. And many of the same worries that weighed on investors earlier in the year remain: rising energy costs, a slumping housing market and a possible credit crunch.
Still, the stock market's best-known indicator surged past its latest milestone shortly after trading began Wednesday, and even made it past 13,100, rising as high as 13,107.45. The Dow closed at 13,089.89, up 135.95 or 1.05 percent.
The broader market shared in the rally. The Standard & Poor's 500 index rose 15.01, or 1.01 percent, to 1,495.42, after reaching 1,496.59, a six-and-a-half-year high. The technology-dominated NASDAQ composite index advanced 23.35, or 0.92 percent, to 2,547.89, after hitting a six-year high of 2,551.39.
And the Russell 2000 index, which reflects the performance of smaller companies, also had a record close, rising 5.71, or 0.69 percent, to 832.07.
It took the Dow just 129 trading days, since Oct. 18, to make the trek from 12,000 to 13,000, far less than the seven-and-a-half years the blue chips took to go from 11,000 to 12,000. But the swiftness of this latest trip does recall the days of the dot-com boom when the major indexes were soaring and it took the Dow a mere 24 days to barrel from 10,000 to 11,000.
The Dow climbed to a record this time as many of the US' biggest companies surpassed analysts' first-quarter earnings projections. Among those beating forecasts on Wednesday: soft-drink maker PepsiCo Inc, materials manufacturer Corning Inc and Dow component Boeing Co.
Wall Street got an additional lift from the US Commerce Department's report on durable goods last month, which showed a gain in orders of business capital goods and reassured investors that demand for US products remains strong. The department also reported that sales of new homes rebounded slightly last month.
About two-thirds of US companies so far have reported earnings that were in line with or higher than analyst expectations, said Jim Herrick, director of equity trading at Baird & Co.
"We've had pockets of companies report better earnings, and in light of the Fed not appearing to raise rates anytime soon, that bodes well for the market," Herrick said. "Going forward, the market's going to be data-driven. The market's going to focus on economic data to get a hint about what the Fed will do in the latter half of the year."
Wednesday's advance gained even more momentum from the Federal Reserve's assessment that economic growth seemed moderate in much of the country. Inflation appeared tame, according to the Fed's Beige Book, which describes economic conditions in regions around the country and arrives two weeks before the central bank's next meeting.
The Dow was the first of the major indexes to recover from the stock market's prolonged slump in the early part of the decade. But its latest achievement did not come without setbacks and volatility -- the index lost 416 points in a single session on Feb. 27 amid fears that the US economy would fall into recession and that China's economy would slow as well. Wall Street has since had periodic shudders over signs that inflation might be getting out of hand -- a trend that would lead the Fed to resume interest rate hikes -- and over data showing weakness in the housing market.
Just two weeks ago, the Dow fell nearly 90 points after minutes from the last Fed meeting showed the central bank's level of concern about inflation.
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