By The Associated Press
Dow hits record, erasing Great Recession losses
NEW YORK (AP) â¿¿ The stock market is back.
Five and a half years after the start of a frightening drop that erased $11 trillion from stock portfolios and made investors despair of ever getting their money back, the Dow Jones industrial average has regained all the losses suffered during the Great Recession and reached a new high. The blue-chip index rose 125.95 points Tuesday and closed at 14,253.77, topping the previous record of 14,164.53 on Oct. 9, 2007, by 89.24 points.
"It signals that things are getting back to normal," says Nicolas Colas, chief market strategist at BNY ConvergEx, a brokerage. "Unemployment is too high, economic growth too sluggish, but stocks are anticipating improvement."
The new record suggests that investors who did not panic and sell their stocks in the 2008-2009 financial crisis have fully recovered. Those who have reinvested dividends or added to their holdings have done even better. Since bottoming at 6,547.05 on March 9, 2009, the Dow has risen 7,706.72 points or 118 percent. The Dow record does not include the impact of inflation. Adjusted for that, the Dow would have to reach 15,502 to match its old record.
US stock market isn't the only one racing ahead
LONDON (AP) â¿¿ U.S. stocks are not alone in racing ahead this year. Many markets in Europe and Asia are trading at multi-year highs, too, in part because of Wall Street's rally.
The advances in some places have been surprising, given paltry levels of economic growth around the world. Britain's FTSE 100, for example, enjoyed its best January since 1989 with an increase of more than 6 percent even though the British economy has one foot in another recession.
Many explanations have been given for 2013's roaring start, notably the relief over a U.S. budget agreement that avoided sending the world's largest economy over the "fiscal cliff" of automatic tax increases and spending cuts that threatened to drag it back into recession. Several other factors are also at play: The future of the euro appears more secure than it has been for much of the past three years. There are rising hopes that Asia will give global growth another lift. The slowdown in China, the world's No. 2 economy, seems to have leveled. And a new government in Tokyo has made revival of the moribund Japanese economy its top priority.