The Dow Jones industrials broke through the 10,000 barrier for all of one minute today, reaching a significant milestone in Wall Street’s remarkable recovery from the bear market before retreating on profit-taking.
Stocks moved higher as investors picked up shares on anticipation that the Federal Reserve would keep interest rates low for some time.
But by the time the Fed issued its decision in the afternoon to leave rates unchanged, investors were looking to lock in some gains, analysts said.
The index of 30 blue chip stocks moved past its milestone shortly after trading began. It was the first time since May 31, 2002, that the Dow had been above 10,000 and marked a solid comeback from the five-year low of 7,286.27 reached on October 9, 2002.
A cheer went up on the floor of the New York Stock Exchange to greet the Dow’s achievement today, an expression of traders’ relief that Wall Street has maintained its upward path. Last week, the Nasdaq composite index crossed 2,000 for the first time in nearly two years.
“This rally is coincident with the fact the market had a stellar performance this year, because it correctly predicted the recovery in the economy,” said Joseph Battipaglia, chief investment officer at Ryan Beck & Co.
The Dow pushed up 37.85 to hit 10,003.12 before pulling back and closing at 9,923.42, down 41.85, or 0.4%. In the previous session, the blue chip average climbed 102.59.
The broader market also finished lower. The Nasdaq fell 40.53, or 2.1%, at 1,908.32. The Standard & Poor’s 500 index declined 9.12, or 0.9%, to 1,060.18.
As expected, the Fed voted to keep short-term interest rates at a 45-year low. In its statement, the Fed said it believed rates could be maintained “for a considerable period”, allaying investor concerns about a rate hike in the near future.
Stocks have pushed higher in recent weeks on investor expectations for a stronger economy. But analysts wonder if the market might be due for some pullbacks or sideways trading, citing high share valuations.
“What would be more significant is if we move from these levels to meaningfully higher ground – 3-5% over the next several months,” Battipaglia said. “If we indeed go there, Dow 10,000 will be a very happy moment in time.”
Peter Cardillo, president and chief strategist of Global Partner Securities Inc, said the 10,000 level might represent a milestone that investors remain hesitant to push past on a longer-term basis.
“One reason why the market is not reacting positively to the Fed decision is mostly technical,” he said. “We had a brief passing of the 10,000 level, but the fact it didn’t hold basically suggests there is still psychological resistance.”
Kroger Co declined 58 cents to 17.31 after the supermarket giant reported third-quarter earnings that fell below expectations.
Texas Instruments fell 75 cents to 27.49 after the tech company raised its fourth-quarter outlook, citing strong growth.
But General Motors gained 1.27 to 48.41 after Goldman Sachs raised the car manufacturer’s stock rating to ”outperform” from “in-line”, citing improvements in the company’s pension plan.
Declining issues outnumbered advancers 9 to 5 on the NYSE. Volume was moderate.
The Russell 2000 index, a barometer of smaller company stocks, fell 8.50, or 1.6%, to 534.54.