Dow crosses 14,000 early but falls short at day's end

Wednesday, July 18, 2007
A new high for the Dow Jones was seen Tuesday on a billboard in Times Square in New York. A relatively tame inflation report gave investors reason to extend a Wall Street rally. (Seth Wenig ~ Associated Press)

NEW YORK -- The Dow Jones industrial average swept past 14,000 for the first time Tuesday after a mostly tame inflation reading gave investors reason to extend an extraordinary -- but perhaps questionable -- Wall Street rally.

The stock market's best-known indicator crossed 14,000 in the first half-hour of trading though it didn't close above that level; it did, however, manage its fourth record close in as many sessions. The Dow rose as high as 14,021.95, having taken just 57 trading days to make the trip from 13,000. Broader market indicators closed mixed.

Stocks have risen fairly steadily since the spring amid a continuum of buyout news and evidence that despite higher fuel prices and the ongoing problems in the housing market and mortgage lending industry, consumers are spending and companies are still finding room for growth. With the Federal Reserve ever vigilant about inflation, any news that prices are rising at a moderate pace has added to the market's momentum, as it did Tuesday.

The release of generally upbeat earnings reports helped reassure a market that had worried that a slowing economy and rising energy prices could cut into corporate profits.

But the Dow's latest accomplishment does raise questions about whether investors are buying more on speculation than fundamentals -- and whether these gains can hold. The market still faces issues including rising oil prices that could crimp consumer spending. And a drop in takeover deals could puncture investors sentiment as could a further souring of subprime loans amid a cooling housing market.

The past week shows how easily swayed Wall Street can be. A week ago, the average tumbled nearly 150 points after investors received a handful of disappointing profit forecasts. Only two days later, on Thursday, the Dow barreled 283 points higher as investors put a positive spin on a generally lackluster batch of retail sales reports.

The Dow rose 20.57, or 0.15 percent, to close at 13,971.55. Broader stock indicators ended mixed. The Standard & Poor's 500 index slipped 0.15, or 0.01 percent, to 1,549.37 having set its own record highs in recent sessions. The Nasdaq composite index rose 14.96, or 0.55 percent, to 2,712.29.

The short time that it took the Dow to pass this its milestone recalls its ascent during the dot-com boom, especially because it took only 129 days to make the passage from 12,000 to 13,000. In the late 1990s, the Dow took just 24 days to go from 10,000 to 11,000, and 89 days to go from 6,000 to 7,000.

The end of the high-tech boom plus the recession and the aftermath of the Sept. 11, 2001, terror attacks helped send all the major market indexes into reverse. It took the Dow 7 1/2 years to trek from 11,000 to 12,000, and only last October began setting its first record highs since January 2000. The Dow has since logged 53 record closes including Tuesday's gains.

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