Dow Closes Above 12,000

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Dow Closes Above 12,000

Steve Verdon | Thursday, October 19, 2006

The Dow Jones Industrial Average closed above 12,000 for the first time.

Oct. 19 (Bloomberg) — The Dow Jones Industrial Average closed above 12,000 for the first time after Coca-Cola Co.’s profit beat analysts’ estimates and Lehman Brothers Holdings Inc. predicted faster earnings growth for telephone companies.

The stock market is considered a leading economic indicator and this is good news for the economy. It doesn’t mean that there isn’t any weakness in the economy, but it is still good news. Further, overall, the index of leading economic indicators increased by 0.1% in September. The index Coincident indicators was steady and the lagging index was up by 0.2%.

There also seems to be speculation that the Federal Reserve will leave interest rates unchanged when they meet later this month.

Optimism about earnings growth and signs of easing inflation has pushed the Dow average up 2.9 percent this month. Stocks have also advanced on speculation the Federal Reserve will leave interest rates unchanged for the third consecutive month next week. Policy makers meet on Oct. 24-25.

Hopefully, Bernanke and the Fed can pull off the soft landing.

About the Author: Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research.

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