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DJIA Breaks through 12,000 Level

The Dow Jones Industrial Average (DJIA) has officially broken through the 12,000 level and now stands above where this widely recognized U.S. stock index stood on September 15, 2008 – the day that Lehman Brothers filed for the largest bankruptcy in the history of our country.   That event marked the day that many analysts suggest the “Great Global Credit Crisis” was pushed into high gear resulting in a historic bear market that lasted until March 9, 2009.

Dow Jones Industrial Average Index (9/15/2008 – 2/1/2011)
dow12kchart

Source: MSN Money, February 2, 2011.  Past performance is not an indication of future results.

This is a significant accomplish for the DJIA as it was the first time the index crossed over 12,000 since June 19, 2008.   This feat came on the heels of a 2.7% gain for the DJIA in January, marking the strongest first month of trading year in 14 years.   So, does all of this mean that an “all-clear” signal has just appeared in the stock market?

Unfortunately, we, at Hennion & Walsh, do not believe that this is the case just yet as too many headwinds still exist for both the U.S. and global economic recoveries.  These headwinds include a struggling (and perhaps retreating) real estate market, geopolitical uncertainties (i.e. Egypt, Iran, Spain, etc…), rising commodity prices and high levels of unemployment.  However, with respect to the latter, some good news appeared on the labor front today as ADP reported an increase of 187,000 private-sector jobs in January, which marked the twelfth consecutive month of private-sector job increases.    This is good news for potential U.S. GDP growth, from a consumer spending standpoint, although not as important, from our perspective, as a continual decline in jobless claims.    We eagerly await further reports in this regard which are due to be released later this week.