The Dow 10,000 hype isn’t there, as it was two years ago.
But these days a lot of folks on Wall Street are even more anxious about whether the Dow can retake the 11,000 mark and hold its ground.
Even an amateur chart watcher can see why.
With the Dow at 10,965.85 at Monday’s close, the popular stock market indicator is near the middle of a trading range that has persisted for two years.
On an intraday basis, the Dow traded as high as 11,750 in January 2000, and as low as 9654 last October. But most of the action has occurred around the 10,800 level.
The technology stock roller coaster gave the chart of the tech-heavy Nasdaq composite index an inverted-V shape over the last two years–a boom/bust cycle that will go into the history books.
But over the same period, the Dow, representing the broader U.S. economy, has gone essentially nowhere, despite minor rallies and slumps along the way.
A superficial examination of the Dow pattern since early 1999 suggests that the index correctly predicted today’s sluggish economy, with zero or near-zero growth.
When the Dow first closed above the 10,000 mark on March 29, 1999, many market pundits dismissed the milestone as virtually meaningless, except as a mere psychological boost for investors.
Indeed, the first move above 10,000 was an incidental moment on a rapid, nearly straight-line advance from 7400 in September 1998 to 11,000 in May 1999.
But today, psychological boosts are very much in demand.
Conventional analysis has determined that the sentiments of investors and consumers–not business management skills or the fiscal and monetary abilities of politicians and central bankers–hold the key to avoiding a recession and bear market in stocks.
A sustained Dow rally above 11,000 would at least put the Dow into the same millennium as its record high and offer some comfort to investors still reeling from last year’s tech wreck.
Monday’s action: Traders on Monday made another assault on the 11,000 mark on the Dow, pushing the best-known stock market indicator up more than 100 points.
The move, in thin trading, erased most of Friday’s 119-point slump. It was the Dow’s fifth gain in the last six trading sessions, reflecting optimistic sentiment that lower interest rates will boost the fortunes of major companies.
But technology stocks faltered, as traders continued to question the sustainability of January’s robust 12 percent advance in the Nasdaq composite index.
The Dow has not closed above 11,000 since mid-September of last year. On Monday, the Dow added 101.75 points, to 10,965.85, on New York Stock Exchange volume of 1.01 billion shares.
Winning stocks outnumbered losers by an 8-7 margin among NYSE-listed stocks.
The Nasdaq composite index slipped 17.29, to 2643.21, on thin Nasdaq volume of 1.65 billion shares. Losers topped winners by more than a 4-3 margin among Nasdaq stocks.
A Lehman Brothers analyst issued a downbeat outlook for semiconductor stocks, which rallied in January but have faltered in early February.
Tuesday’s quarterly financial report and outlook by computer networking leader Cisco Systems could guide the near-term fate of Nasdaq stocks.
According to First Call/Thomson Financial, Cisco is expected to post profits of 19 cents a share for its fiscal second quarter, up substantially from the year-earlier quarter, but company officials said in recent weeks that the quarter was challenging.
On Monday, Cisco closed down 94 cents, to $34.56.
Treasury securities ended little changed. Oil prices fell after Saudi officials indicated no further production cutbacks were necessary.
Treasury auction: Interest rates fell at the weekly auction of 3- and 6-month Treasury bills.
The discount rate for 3-month bills was 4.92 percent, down from 4.98 percent at last week’s auction. The 6-month rate was 4.75 percent, down from 4.84 percent last week.
The coupon-equivalent rates were 5.05 percent for 3-month bills and 4.94 percent for 6-month bills.
Local news: The Nasdaq stock market told Barrington-based Alternative Resources that the company has failed to maintain the required minimum bid price to be listed as a Nasdaq stock. The company, which provides staffing help for technology companies, said it would seek a hearing on the finding. Shares closed at 94 cents, down nearly 12 percent.
