Heard off the Street: Seems Dow 13,000 was a false Messiah
Share with others:
All those misguided souls who eagerly awaited deliverance at the hands of Dow 13,000 did not get much time to enjoy their version of the rapture last week.
After closing Tuesday at 13,005.12 -- the first time it has breached that level since mid-May 2008 -- the Dow Jones industrial average beat a tepid retreat for the rest of the week. It closed Friday at 12,977.6, down 3.4 for the week.
Even euphoria Friday over the initial public offering of Yelp that caused shares of the online reviewer of restaurants, strip clubs, high schools and other essential services to jump 64 percent on their debut failed to reinvigorate the widely watched index.
For those fervent believers still keeping score, the Dow is up 6 percent for the year after climbing 5.5 percent in 2011. It has risen 7.5 percent from a year ago, when the Dow stood at 12,066.8.
A broader market index that more seasoned investors keep their eyes on -- the Standard & Poor's 500 -- was flat last year and has advanced 9 percent this year. The Dow only reflects the performance of 30 stocks while the 500 members of the S&P index represent a wider swath of economic activity.
James Zalenka, a certified financial planner with The Baran James Co. in Scott, said the Dow's climb to 13,000 offers some measure of confidence in where the market and economy are headed. But he wouldn't read too much into the achievement.
"It says that things have somewhat come back to normal, but there's still a lot of bad news out there with the debt and the political environment," Mr. Zalenka said. "We're probably one political event away from people losing confidence. We're kind of walking a tightrope."
Pittsburgh investment manager Jeff Mindlin said Dow 13,000 is "nothing more than a media talking point" that may have some value to politicians trying to make a case that things are improving.
"It's irrelevant. It does not mean [the market] is going to go up. It doesn't mean it's going to go down," he said. "It's being able to get up over that and stay. That's really the question."
Mr. Mindlin said several factors indicate the Dow may have trouble achieving that, including light trading volume, oil prices and tensions with Iran.
Greg Melvin of C.S. McKee, a Downtown investment manager, was unimpressed by the Dow's achievement on Tuesday. He said the S&P 500 is one of several broad market indexes that are better bellwethers. But he had good news for those who insist on monitoring the Dow: Strong corporate earnings and interest rates at 50-year lows eventually will make Dow 13,000 a thing of the past.
First Published 2012-03-03 23:30:27