Dow's high may draw in investors

By hitting its highest level ever, the Dow Jones Industrial Average may end up heightening awareness and stir interest that will bring new investors in and old ones back.

The DJIA’s feat solidifies the transition between the bear market bubble and the generally more orderly approach that has evolved when it comes to investing. The DJIA, after all, is made up of sturdy blue chip companies and that’s what investors chose in making it the first major stock barometer to recover.

The Standard & Poor’s 500 Index is still off about 200 points away from its peak of 1527.46. And the Nasdaq Composite Index is down about 2801 points from its peak.

It’s been a long road back for the Dow. From Oct. 9, 2002, its lowest point between the last record on Jan. 14 and the new one made on Tuesday, the Dow has gained 4469.08 points, or 61%.

And the Dow’s accomplishment may have major reverberations in terms of aiding the market, some analysts feel.

“People in the financial field live the market day in and day out,” said Art Hogan, chief market analyst at Jefferies. But when the Dow makes a new high people on Main Street start taking note. “They say we’re past the bubble and that can bring
them back in.”

In other words, according to Hogan, “It’s a broad wake-up call. It proves the market is back.”

And aside from more retail-type investors, investors in gold, real estate or other areas may feel the stock market has more appeal.”

And the Dow isn’t done, Hogan said. “I think the market will go higher from here because the dynamic that got us here isn’t going away. We’ve got consistently low energy prices and a Fed that has stopped raising interest rates. Barring some
external forces, this market sees the path of least resistance is to the upside.”

There are others who believe that the Dow’s ascent bodes well for the market.

“From a psychological standpoint it adds confidence and gives investors a sense of security,” said Andre Bakhos, president of Princeton Financial. “The money is telling you that the market is OK.”

Other strategists are hoping the rally will become more broad based.

“Oil dropping below $60 is helping the general market psychology and drawing money towards financials and technology again,” said Barry Hyman, equity market strategist at EKN Financial Services. “As long as that psychology develops that way its going be hard to sell off the market.”

That said, some traders aren’t convinced that the Dow’s record will have a wide impact.

-- from Tomorrow's News Today