Bolstered by rising consumer confidence and a decline in oil prices, the Dow Jones industrial average closed above 13,000 for the first time in nearly four years on Tuesday.
The rising stock market is a sign that investors are feeling more confident that the economy will be improving for at least the short-term. And that could have ramifications beyond Wall Street.
“Higher stock prices might lead people to be more optimistic about the economy,” said Allan Timmerman, finance professor at the University of California, San Diego.
But Timmerman warned that the market “doesn’t have the best track record for predicting economic growth, even if it is a very noisy indicator.”
The Dow, which had been flirting with the 13,000 mark for the past week, rose 23.61 points on Tuesday, or 0.2 percent, to close at 13,005.12.
The Dow last closed above 13,000 in May 2008, four months before the fall of the Lehman Brothers investment bank and the worst of the global financial crisis.
The other major indexes sit at multi-year highs as well. The Standard & Poor's 500 closed Tuesday at its highest level since June 2008, and the Nasdaq has not traded so high since December 2000, during the bursting of the bubble in technology stocks.
[Looking at bigcharts.com, the all-time high is slightly north of 14K set in 2007. It looks that it's about doubled from the March 09 low.]
(However, adjusting for dividends, it DID hit an all-time high.)