This story was reported by Aisha Al-Muslim, Maura McDermott, James T. Madore, Carrie Mason-Draffen, Victor Ocasio and David Reich-Hale.
Long Island stands to benefit from the stock market’s surge since Election Day, which culminated Wednesday when the Dow Jones industrial average closed at 20,068.51, the first time it has ever crossed the 20,000 mark.
The rise shows that Wall Street, an important local employer, is healthy, and it may encourage consumers to spend more.
Long Islanders said they were happy about the boost to their portfolios, though they noted stock gains can prove ephemeral. And some businesses said they expected growing consumer confidence would allow them to do more hiring.
The Dow — an index of 30 major publicly traded companies — has risen more than 9 percent since Nov. 8. None of its constituent companies are headquartered on Long Island, though many have operations here. Experts said Long Island will benefit nonetheless.
“When Wall Street has a good year it benefits the local economy, and Long Island is definitely a part of that,” said Barry Ritholtz, a Locust Valley resident and chairman and chief investment officer of Manhattan-based Ritholtz Wealth Management.
Those high financial-sector salaries and bonuses “will work their way into the local economy,” as financiers spend money to buy cars and houses and hire contractors, Ritholtz said.
About 20 percent of Long Islanders commute to the city for jobs, some of them on Wall Street, according to research by the Long Island Association, the largest local business group, and the Center for An Urban Future, based in New York.
On Long Island, financial services firms and insurers employed 55,200 people in December, down from 60,400 in December 2007 before the recession struck, according to James Brown, a labor market analyst for the state Department of Labor. In New York City, the firms employed 331,500 in December, compared with 350,300 in December 2007.
Although financial services employment has shrunk, “it’s still a major employer,” Ritholtz said.
The market’s rise also signals investor confidence in the nation’s economy.
“A higher stock market should bolster consumer confidence and spending, which is a good thing for the Long Island economy,” said John A. Rizzo, the LIA’s chief economist and a Stony Brook University professor. Consumer spending accounts for about 70 percent of economic activity in Nassau and Suffolk counties.
The Dow’s rise “is a big billboard that says, ‘New York is back, the region is back, the economy has improved,’ ” Ritholtz said.
Melville resident Mitchell Levy, 61, a finance manager at Paragon Honda in Queens, said that the stock market’s rise will likely benefit “normal people,” as well as those invested in the stock market.
He said the Dow’s rise, which he attributes to President Donald Trump’s election and the business focus of his Cabinet appointments, signals a better economy and more income for workers. “If people are going to have more money, they’re going to buy cars,” he said.
Rob Basso, president of Freeport-based Advantage Payroll Services, which has 3,000 clients, also said he felt more confident after the election and the stock market’s rise. But he said his optimism is tempered: “Those of us that have grown and run businesses in New York don’t necessarily see the upside to [the Dow’s rise] because of the increased cost of running a business in New York,” he said.
Sal Lupinacci, 65, a retiree living in Huntington Station, said he was surprised the market didn’t go down after Trump was elected president.
“The uncertainty, I thought, would hurt the market,” Lupinacci said. “But when you think about it, his decisions so far have been business-friendly, and he took over an economy that was headed in the right direction.”
Lupinacci, who worked in the banking industry as an operations manager for 34 years until 2009, said that when he looked at his 401(k) statement in December, there was “an uptick, and that’s a good thing. I get my statements every three months, and that’s when I look at it. It looked better.”
Barbara Golemme, 68, an internal auditor who lives in Seaford, said she was happy to see how well the market is doing, even though she has no plans to tap her retirement savings soon.
“I never would have expected in my lifetime that I would see it go that high,” she said.
Golemme said she remained philosophical about the market. “You have to remember that what’s there today may not be there tomorrow,” she said.
Karen Cohn, 59, a graphic designer and Long Beach resident, said, “When you have 401(k)s you’re in it for the long haul. You’re not going to go and sell something tomorrow.”
Small-business confidence could get a psychological boost from sustained high stock prices, said Douglas C. Manditch, chairman and chief executive of Islandia-based Empire National Bank.
“Probably by the third quarter, you’ll see some economic growth,” Manditch said. “It’s like everything else that’s big. You can turn a 12-foot sailboat easily. You can’t turn a 100-foot sailboat as easily.”
Mike Chambers, 52, co-owner and president of Central Business Systems, an office equipment and office technology provider in Melville, said the rising Dow meant that more companies would invest in office technology, boding well for his business and translating into more jobs. His company has close to 50 employees.
“The Dow going up is a great indicator of our financial stability going forward,” said Chambers, adding he is looking into investing more in the stock market. “Our business in particular involves a number of industries, which is what the Dow represents.”
For Mark Vigliante, 43, president and chief executive of M&V Limousines, a limo and bus company in Commack, the Dow’s historic mark is a double-edged sword.
“Right now, the Dow going up is a very good thing for us. We have a lot of clients who are stockbrokers. If they are making more money, that means they are going to be spending more money with us. It also means more baby boomers, who like to travel, will take rides with us to the airport.”
But the improving economy also has led to higher interest rates, which could affect his plans to buy six more buses to use when he relaunches Hampton Luxury Liner, which M&V recently acquired through an auction.
“If interest rates rise, that would be a bad thing for us,” Vigliante said.
THE DOW AND YOU
What is the Dow?
The Dow Jones industrial average is an index of 30 publicly traded companies designed to reflect the broad U.S. economy. The Dow is populated by corporate giants like Apple, Exxon Mobil Corp. and McDonald’s.
Why is it rising?
The Dow climbs when its member stocks rise, which happens when investors expect those companies’ profits to grow. Goldman Sachs Group, JPMorgan Chase and other Dow components have rallied as the Trump administration moves to scale back government regulations and cut corporate taxes.
What does Dow 20,000 mean to my 401(k) or IRA?
That depends on what securities your retirement accounts hold. A rally in the Dow may not be reflected in a retirement account invested in bonds or precious metals. Accounts holding large-capitalization stocks could see a benefit.
What does it mean to me if I don’t have any stock investments?
Strength in the Dow reflects optimism about the U.S. economy at least in the short term. Those expectations can translate to hiring and economic expansion of businesses in general.
What does it mean to the LI economy?
Though no Dow components are based on Long Island, some have units here, contracts with local companies or employ commuters from Nassau and Suffolk counties. And many Long Islanders work on Wall Street, whose health is signified by the strong Dow. — Ken Schachter