The Dow Jones Industrial Average achieved a significant milestone this week, when it broached the 13,000 mark for the first time in four years. There were reportedly cheers erupting on the floor of the New York Stock Exchange when the moment finally arrived, early Tuesday afternoon. Of course, they were shortlived, as the Dow promptly slipped back behind the magic number, and still hasn’t actually closed above 13,000.
In reality, there’s nothing magic about Dow 13,000, just as there was nothing magic about Dow 10,000 or Dow 1,000. The 30 individual stocks that make up the Dow all trade independently of each other and are entirely immune to such milestones. No one ever bought Coca-Cola stock in an attempt to roll the Dow over to a new level.
But to the extent that passing those psychological barriers signal renewed confidence on the part of both traders and investors, they are probably worth noting. A media celebration around the crossing of another thousand-point mark can help people understand and internalize the idea that the recession is over and the markets are rebounding. At any rate, it’s much more positive when we see the media taking note of these benchmarks on the way up than when we were noting them on the way down.
With Dow 13,000 out of the way, the next hurdle for the Dow to clear is 14,000. The Dow hasn’t closed above 14,000 since October 12, 2007. In fact, it’s only ever spent eight trading days above 14,000. The first came on July 19th, 2007, then it returned to that level on Monday, October 1st; Friday, October 5th; and the week of October 8th through the 12th, all in 2007. The peak close of the Dow came on October 9th, when it closed at 14,164. Two days later, on October 11th, the Dow reached its absolute highest point in intraday trading, when it touched 14,198.