Dow 10,000: It Still Matters


As the market continues to make meat out of the bears, the Dow is once again approaching its most famous psychological benchmark: Dow 10,000.

Some may snicker, some may howl that it’s meaningless, but to many the five-digit milestone still resonates.

If the number means anything, it’s 99% psychological. Yet as we once again approach 10,000, this milestone raises questions about the market’s forward-looking optimism both then and now.

Has the US economy fallen so far back during this crisis that it failed to achieve the dreams of traders who cheered the Dow back in 1999? Were the technological advances not achieved? Or for the bears… would Dow 10,000 mean we’ve gone too far too fast?

So as not to be flimsy, we’ll say this: Dow 10,000 sounds like a piece of cake for an America whose best days are ahead. Though surely many will disagree, as may the market in the near-term.

The AP reports:

Q: What would Dow 10,000 mean this time?

A: Some analysts say it holds little significance given how far the market remains from its peak almost two years ago. But many contend that seeing Wall Street’s best-known thermometer roll back to five digits could inject traders with confidence. “It’s a like a century rather than 99 years. There’s not that big of a difference but there’s a big difference psychologically,” said Dan Cook, senior market analyst at IG Markets in Chicago.

Q: What would it mean for the market’s recovery?

A: The Dow is down 32.6 per cent from its peak of 14,165 in October 2007. At 10,000 it would still be down 29.4 per cent. Other indicators that traders tend to pay more attention to, like the Standard & Poor’s 500 index, are also down by similar amounts.

Q: Should a climb past 10,000 make investors more confident?

A: Analysts are divided. But it would certainly feel better than when the Dow skidded 370 points on Oct. 6, 2008, to close below 10,000 for the first time in four years. By March, the Dow had tumbled to a 12-year low of 6,547. That was a drop of 53.8 per cent from its high.

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