Dow Closes Above 13,000 for First Time = Bad News?
The Dow has hit an all-time high and the other markets are following suit. Great news, right? Not according to AP Business Writers Madlen Read and Tim Paradis:
It looks like a cause for celebration: The Dow Jones industrial average surged from 12,000 to 13,000 in just six months. But appearances can be deceiving, and there may be more reason to worry rather than rejoice about Wall Street’s latest accomplishment.
Stronger-than-expected profits from several large companies helped push the stock market to historic heights. But many big corporations, including the Dow components, made a chunk of that money overseas, where economies are growing faster than in the U.S. And many of the same worries that weighed on investors earlier in the year remain: rising energy costs, a slumping housing market and a possible credit crunch.
Still, the stock market’s best-known indicator surged past its latest milestone shortly after trading began Wednesday, and even made it past 13,100, rising as high as 13,107.45. According to preliminary calculations, it closed at 13,089.89, up 135.95 or 1.05 percent.
The broader market shared in the rally. The Standard & Poor’s 500 index rose 15.01, or 1.01 percent, to 1,495.42, after reaching 1,496.59, a six-and-a-half-year high. The technology-dominated Nasdaq composite index advanced 23.35, or 0.92 percent, to 2,547.89, after hitting a six-year high of 2,551.39.
So, American investors have widely diversified their assets to take advantage of increasing global prosperity. Yet, that’s a bad thing? Even though this means that 1) other people are less poor, 2) those people can buy more American goods and services, and 3) Americans are sharing directly in the good fortune of others?
UPDATE: Jim Henley mentions an article which I have deduced to be Gregg Easterbrook, “The sky is always falling: why all economic news is bad,” The New Republic, August 21, 1989, 21(5). I’ve found the cite in several places, including InfoTrac, but haven’t come across a full-text version. Anyone know where to find one? Presumably, it was the genesis for his book The Progress Paradox: How Life Gets Better While People Feel Worse (Random House, 2003).