Dow’s up further, but is the economy?

Alisa Roth Apr 25, 2007
HTML EMBED:
COPY

Dow’s up further, but is the economy?

Alisa Roth Apr 25, 2007
HTML EMBED:
COPY

KAI RYSSDAL: Thirteen thousand, eighty-nine point eighty-nine was the official close. The blue chips gained more than a percent to pop through the 13,000 barrier after a week or so of trying. It might be easier to ask, though, what wasn’t up than what was. Both the NASDAQ and the S&P are on the rise. Ditto for the Russell 2000, the Wilshire 5000 — you name it, it’s going up.

There are those who will tell you they’re all signs the economy is officially up. Others say, it’s just a bunch of numbers. Marketplace’s Alisa Roth tells us more now from New York.


ALISA ROTH: It took more than seven years for the Dow Jones Industrial Average to go from 11,000 to 12,000. Today’s milestone came much faster — only 129 trading days have passed since it hit the 12,000 mark last October.

But analyst John Kosar of Asbury Research is unimpressed.

JOHN KOSAR: It’s the bellwether, and it’s the one that everybody likes to talk about around the water cooler. But I think it’s probably more important to the sale of party hats at CNBC than it does as any kind of an, you know, economic indicator.

Kosar says it’s unreasonable to judge the state of the economy — or even the market — by an index like the Dow Jones Industrials, which is only 30 companies in one sector.

The NASDAQ and the broader S&P 500 are both up, too. And some market-watchers say that gives today’s number more weight.

But to use a cliché, what goes up must come down. And AG Edwards market strategist Al Goldman says it’s not a question of if the correction comes, but how.

AL GOLDMAN: We can have a cardiac arrest, where the market drops dramatically in a couple of days and it takes care of the excesses. Or we can get the old-fashioned water torture treatment that takes two, three, four weeks, and there’s no way to know in advance which it’s going to be.

Strong first-quarter profit reports have helped push the market upward. But earnings season is almost over.

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

As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.

Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.

Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.