Tuesday, March 05, 2013 / By Matt JARZEMSKY, WSJ
The Dow Jones Industrial Average powered above its intraday record, riding a resilient 2013 advance and looking to put the devastating declines of the financial crisis in the rearview mirror.
"It really does represent an achievement that we have climbed out of this crater," said Jack Ablin, chief investment officer at Chicago 's BMO Private Bank, which manages $66 billion.
Shortly after Tuesday's opening bell, the Dow industrials climbed past the 14164.53 closing peak hit on Oct. 9, 2007 and then broke through the intraday record of 14198.10, set Oct. 11, 2007, and continued rising above 14200.
The average slid 54% over the 18 months that followed the 2007 record, bottoming at 6547.05 in March 2009. Since then, the blue chips have more than doubled. A close above the October 2007 high would be a record for the Dow average.
"The national perception will be that we're past the lost decade if we go to new highs in the stock market," said Jim Paulsen, chief investment strategist at Wells Capital Management, which manages $332 billion. "The conversation has been: Are you being conservative enough in this high-risk investment world? And what it's changing to is: Are you being too conservative in this new bull market?"
Erik Davidson, deputy chief investment officer at Wells Fargo Private Bank, cited a rebounding economy, strong profits from U.S. companies and surging dividends as factors in pushing stocks to records. "There are a lot of great things going on," said Mr. Davidson, whose firm oversees $170 billion.
Along with economic stabilization and the recovery in corporate profits, efforts by the Federal Reserve and other central banks to boost asset prices have also juiced stocks' rally.
"It's a testament to what the Fed has done and what investors have done to move beyond the financial crisis," said Mr. Ablin.
Some other stock-market gauges, such as the Russell 2000 index of small-capitalization companies and the Dow Jones Transportation Average, beat the Dow industrials to the punch, notching their own record closes in January. Bulls argue stocks remain cheap, relative to companies' earnings, and that low bond yields will force more investors to buy companies' shares.
"At the end of the day, what really matters are valuations," said Mr. Davidson. "It's hard to say the stock market … is 'overbought.'"
But skeptics point to a slowing earnings outlook and potential tax and spending headwinds as lawmakers sort out the U.S. 's debt troubles.
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