Dow 10,000: Is the Market Getting Ahead of Itself?

Oct.14.09 | About: SPDR Dow (DIA)

By David Berman

The Dow did it, sort of.

After much anticipation, the Dow Jones industrial average rose above 10,000 on Wednesday afternoon, for the first time in a year. That marks quite an accomplishment after touching a multi-year low of 6,547 in March.

The downside here is that investors seem to be skittish of 10,000. According to Bloomberg, the Dow rose to an intraday high of 10,001.5, which doesn’t give much breathing room. The index later slid back below the threshold, at 9,994.

Could it be that investors see 10,000 as a symbol of a stock market that is getting ahead of itself? After all, the Dow has approached 10,000 on the upside on three separate occasions over the past 10 years.

The first time was in March 1999 during the dot-com bubble days. That didn’t end well. The second approach was in 2004, when low interest rates were spurring a housing bubble and absurd levels of consumer debt. That didn’t end well either.

Still, with the Dow up 123 points on Wednesday and the broader S&P 500 up 1.3% on strong earnings from JPMorgan Chase & Co. (NYSE:JPM) and Intel Corp. (NASDAQ:INTC), it is unlikely that anyone is complaining right now.

The Wall Street Journal, which is owned by Dow Jones and tends to give the Dow Jones industrial average more attention than it deserves, made a big deal of the Dow hitting the 10,000-mark. You can read their take here.