Dow Jones hits 10,000, drops back down

The Associated Press

NEW YORK -- The Dow broke 10,000 Tuesday, propelled by a record eight years of U.S. economic growth, a boom in high technology and investor enchantment with the Internet.

Traders on the floor of the New York Stock Exchange cheered, waved their hands and tossed hand-ripped confetti as the Dow Jones industrial average, the world's best-known measure of the value of stocks, hit five digits at 8:50 a.m. Topeka time. Then, as often happens after such milestones, sellers took over. The index of 30 blue chip stocks went as high as 10,001.78, then immediately retreated and never made it back. It ended the day down 28.30 at 9,930.47. Still, analysts were pleased with the breakthrough. "It's just a number, but hitting 10,000 says to me it's continued confirmation that the bull market is alive and well," said Alfred E. Goldman of A.G. Edwards & Sons Inc. in St. Louis. The Dow is now up 8 percent this year on top of an unprecedented four straight years of double-digit growth. The index was pushed over the top by everyday events of the business world that often prompt buying -- announcements this week of corporate mergers and the promise of healthy earnings from big companies such as Union Carbide. But these were just the immediate causes. The Dow 10,000 rocket was launched early in the decade, fueled by a growing economy combined with low inflation and interest rates that kept consumers spending and corporate profits rising. The rise of personal computers and technology improved corporate America's productivity even as manufacturing jobs steadily declined. The market got an additional boost in the past year through an explosion of enthusiasm for the Internet. Hundreds of companies have rushed to put a '.com' after their names, expecting a big payoff by selling everything from Furby dolls to stocks online. America Online, for instance, went from $16 a year ago to $105 now. Yahoo, the online directory service, has gone from $21 to $175. Economic troubles in Russia, Asia and Latin America threatened several times over the past two years to halt the Dow's advance, and the Dow slipped below 7,500 as recently as Oct. 8. But then stocks rebounded on a series of three interest rate cuts by the Federal Reserve. The recent perception that the troubled foreign economies are rebounding also allowed the Dow to resume its climb. To many market watchers, the Dow's ascension to 10,000 is more of a curiosity or media event. "It doesn't affect the long-term view," said investor Mark Harchelroad, interviewed outside a Fidelity Investments office in New York. A Dow at 10,000 inevitably raises questions of what happens next. One cause for concern is that the market's recent gains have been concentrated in a few business sectors, most notably Internet and high-tech stocks. Many other businesses are lagging behind. But one argument in favor of even higher stock prices is the growing level of stock ownership among individuals. Roughly 43 percent of U.S. households now own stock or mutual funds, and millions believe the stock market, despite occasional downturns, is the best place to earn money for retirement, college and other needs. Banks can't match the double-digit returns stocks have provided. Still, some fear the fascination with the Internet that has driven the market's recent gains also could be its undoing. Ralph Acampora, director of technical research at Prudential Securities, disagreed. "It's a real industry," he said. "They're not making Hula Hoops. Some of these companies will survive, but not all of them."

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