The benchmark Dow Jones Industrial Average rose to an all-time record Tuesday on news that China was pledging to plow more money into its economy, returning the markets to highs not seen since before the financial crisis.
By 10 a.m. Tuesday, the Dow was up nearly 90 points, or 0.74 percent, to 14,216.70, blowing past a record that was set Oct. 11, 2007, during a time when the economy was just peaking and headed toward disaster. The previous record was 14,198.1.
Gallery
VIDEO | The Washington Post’s Ezra Klein of WonkBlog talks with economic reporter Jim Tankersley about his recent piece that explores whether America’s slow economic growth is the new normal.
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Chris Mayer
Now that the “fiscal cliff” drama is finally over, here’s a tip to begin 2013: Don’t rely on economic forecasts to predict what’s on the horizon when it comes to stocks.
Barry Ritholtz
Huge shifts have already taken place, and understanding what they are will help your financial planning.
A little more than five years later, the crisis seems a distant memory for a number of big U.S. companies that are reporting record profits.
The Standard & Poor’s 500 index also was heading toward its record high, jumping 1,536.66, or 0.75 percent, to 11.460.75 Tuesday morning.
Even a company like Hewlett-Packard, which has struggled to find its footing in recent years, has seen its shares jump more than 40 percent so far this year.
Tuesday’s market gains came as the Chinese government announced overnight it was maintaining a growth target of 7.5 percent for this year. The government said it plans to increase spending to support the country’s economy after a slip in growth last year.
The Dow’s record high confirmed that the ongoing political paralysis in Washington has failed to spook the markets much in the last year.
As lawmakers and President Obama lurch from one fiscal deadline to the next—from the debt ceiling crisis in 2011 to the fiscal cliff to the steep budget cuts triggered last week—the markets have soldiered on with hardly a bump.
“The stock market and the American public are looking at the political theater with a jaundiced eye,” said Ted Weisberg from the New York Stock Exchange where he has been a trader on the floor for more than four decades.
The markets hardly reacted on March 1, when severe domestic and defense cuts went into effect. The Dow Jones Industrial even rose 0.25 percent that day. A popular index for gauging fear in the markets called the CBOE Volatility Index, or the VIX, dropped nearly one percent.
Wall Street’s reactions have developed into a pattern of near-indifference followed by optimism when a political resolution is found.
In the days building up to the fiscal cliff at the end of last year, the markets were sanguine. But when a compromise was reached on New Year’s Day, the Dow Jones Industrial surged more than 308 points, or 2.35 percent. The Standard & Poor’s 500 Index jumped 36.25 points, or 2.54 percent.
Many on Wall Street feel they’ve seen this movie before, even dismissing the dire warnings of politicians as all theater.
“My sense is that our president and the White House are crying wolf,” said Weisberg of President Obama’s warnings about the sequester last week.
People eyeing their retirement portfolios may be cheering the market’s return to pre-recession levels. But how much longer can the good times last?
Ed Easterling, founder and president of investment firm Crestmont Holdings, says that stocks are at a point that’s “about as good as they can get, absent a bubble.”
“It’s time to be careful,” he said.
By 10 a.m. Tuesday, the Dow was up nearly 90 points, or 0.74 percent, to 14,216.70, blowing past a record that was set Oct. 11, 2007, during a time when the economy was just peaking and headed toward disaster. The previous record was 14,198.1.
Gallery
VIDEO | The Washington Post’s Ezra Klein of WonkBlog talks with economic reporter Jim Tankersley about his recent piece that explores whether America’s slow economic growth is the new normal.
Related stories
Chris Mayer
Now that the “fiscal cliff” drama is finally over, here’s a tip to begin 2013: Don’t rely on economic forecasts to predict what’s on the horizon when it comes to stocks.
Barry Ritholtz Huge shifts have already taken place, and understanding what they are will help your financial planning.
A little more than five years later, the crisis seems a distant memory for a number of big U.S. companies that are reporting record profits.
The Standard & Poor’s 500 index also was heading toward its record high, jumping 1,536.66, or 0.75 percent, to 11.460.75 Tuesday morning.
Even a company like Hewlett-Packard, which has struggled to find its footing in recent years, has seen its shares jump more than 40 percent so far this year.
Tuesday’s market gains came as the Chinese government announced overnight it was maintaining a growth target of 7.5 percent for this year. The government said it plans to increase spending to support the country’s economy after a slip in growth last year.
The Dow’s record high confirmed that the ongoing political paralysis in Washington has failed to spook the markets much in the last year.
As lawmakers and President Obama lurch from one fiscal deadline to the next—from the debt ceiling crisis in 2011 to the fiscal cliff to the steep budget cuts triggered last week—the markets have soldiered on with hardly a bump.
“The stock market and the American public are looking at the political theater with a jaundiced eye,” said Ted Weisberg from the New York Stock Exchange where he has been a trader on the floor for more than four decades.
The markets hardly reacted on March 1, when severe domestic and defense cuts went into effect. The Dow Jones Industrial even rose 0.25 percent that day. A popular index for gauging fear in the markets called the CBOE Volatility Index, or the VIX, dropped nearly one percent.
Wall Street’s reactions have developed into a pattern of near-indifference followed by optimism when a political resolution is found.
In the days building up to the fiscal cliff at the end of last year, the markets were sanguine. But when a compromise was reached on New Year’s Day, the Dow Jones Industrial surged more than 308 points, or 2.35 percent. The Standard & Poor’s 500 Index jumped 36.25 points, or 2.54 percent.
Many on Wall Street feel they’ve seen this movie before, even dismissing the dire warnings of politicians as all theater.
“My sense is that our president and the White House are crying wolf,” said Weisberg of President Obama’s warnings about the sequester last week.
People eyeing their retirement portfolios may be cheering the market’s return to pre-recession levels. But how much longer can the good times last?
Ed Easterling, founder and president of investment firm Crestmont Holdings, says that stocks are at a point that’s “about as good as they can get, absent a bubble.”
“It’s time to be careful,” he said.