The Dow's 'nice, big, pretty number,' 10,000

The Dow Jones Industrial Average graph.

TEXT OF STORY

Bill Radke: So many hurdles to jump before people are back to work -- and back to buying stuff. Those struggles have been showing up on Wall Street. Today, the Dow Jones Industrial Average bobbed up and down around 10,000, which is right where it was back in February. Some people say there's something psychologically significant about the 10,000 mark.

We asked Marketplace's Alisa Roth to find out why the Dow can't break away and whether 10k is still a magic number.


Alisa Roth: August is usually a pretty dead time for the stock markets, here and abroad. There are fewer people trading. So that means the market can swing up and down pretty wildly.

Eric Ristuban is at Russell Investments. He says there's also another reason the market keeps bobbing around 10,000: Investors can't decide whether we're doing alright or not.

Eric Ristuban: You've got this view of how well not only corporate America but kind of the global corporate community is performing, and juxtaposed and kind of opposing that is worries about the economy.

In other words, plenty of companies look like good investments. But people won't buy shares in them unless they're pretty sure the economy is going to improve.

But then there's the sticky question of that number: We've been back and forth over the 10,000 mark several times in the last few months. But a lot of people still think Dow 10K is a big deal.

Ryan Detrick is at Schaeffer's Investment Research. He says rationally everybody knows that 10,000 isn't any different than 9,999 or 10,001. But he says, investors, especially individual ones, aren't always rational.

Ryan Detrick: Pull open your newspaper or read online, we broke 10,000. It is kind of a big key level that a lot of people are watching. It's just a nice, big, pretty number, and when that level can break that can just unfortunately lead to a lot more selling.

That is, if the Dow goes below 10,000, investors who are already nervous might decide to pull out. On the other hand, some people are so sure the Dow shouldn't drop below 10,000, they'll step in at the last minute to help keep it there.

In New York, I'm Alisa Roth for Marketplace.

Comments

I agree to American Public Media's Terms and Conditions.
With Generous Support From...