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Dow hits 16,000, showing health of corporate America

A trader on the floor of the New

A trader on the floor of the New York Stock Exchange after the closing bell on Wall Street on Thursday. (Nov. 21, 2013) Credit: UPI

The Dow Jones industrial average closed above 16,000 Thursday for the first time, a milestone that experts said illustrates the health of corporate America and investor portfolios even as the country as a whole still struggles to recover from the recession.

The world's most closely watched indicator of blue-chip stocks has more than doubled since bottoming out at 6,547.05 on March 9, 2009, during the worst economic downturn since the Great Depression.

The Dow, a price-weighted average of 30 stocks such as General Electric, Exxon and Microsoft, first touched 16,000 during trading on Monday but closed below that mark until Thursday.

Thursday's close was 16,009.99, up 109.17 points, or 0.69 percent. Another closely watched market benchmark, the Standard & Poor's 500 index, rose 0.81 percent to 1,795.85.

Analysts attributed the surge Thursday mostly to a U.S. Labor Department report that 21,000 fewer people applied for unemployment benefits last week, a strong sign for the U.S. job market.

The Dow is up about 22 percent this year, despite worries that the Federal Reserve may cut back on its stimulus of the economy.

For many Long Islanders, the rise in stocks boosts the values of 401(k) nest eggs and other personal holdings, providing a paper increase in wealth and a psychological boost that could help loosen consumer purse strings as the year's busiest retail shopping period is about to begin.

Long Islanders, more affluent as a group than average Americans, are more likely to be invested in the market, said John A. Rizzo, chief economist of the Long Island Association, the region's largest business group: "There will be quite a few people benefiting from the stock market rally."

But some Long Islanders are being left out of the recovery.

Federal Reserve Bank of New York researchers said in a report last month that "employment [on Long Island] remains depressed in high-paying sectors like manufacturing, finance and government, while much of the new job creation has been in lower-paying industries like private education, and leisure and hospitality."

Mitchell O. Goldberg, president of the investment firm ClientFirst Strategy Inc. in Dix Hills, said, "There really are two economies." One, he said, reflects a still-weak job market, slow wage growth and consumer uncertainty.

The "other economy" reflects high corporate profits and government statistics that show steady economic improvement. "Money managers look at these statistics to guide their sentiments regarding stocks," Goldberg said.

The stock market's surge "reflects how well the corporate sector is doing," said Irwin Kellner, the Port Washington-based chief economist for MarketWatch, a financial news website. "Yet the average worker's salary has gone nowhere."

Some investors -- including billionaire Carl Icahn, in comments earlier this week -- have expressed concern that the soaring market is ripe for a big decline.

Some Island financial advisers interviewed in recent days, however, suggested that investors who are in the market for the long term hold their positions, arguing that many stocks still have room to rise.

Denise Nostrom, president of Diversified Financial Solutions in Medford, said, "I think there's still a lot of legs left in the market."

With news service reports

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