(MoneyWatch) The Dow Jones industrial average closed Friday at 14,009.79, the first time the stock index has ended trading above that threshold since 2007, before the epic housing crash the following year shook the global economy.
Propelled by reports on U.S. jobs and auto sales, the Dow crossed the line, gaining 149 points on the day, and kept its ground through the early afternoon, after flitting back and forth throughout the morning. It has gained 6.9 percent this year.
“There's a newfound enthusiasm for the equity market,” said Jim Russell, regional investment director at U.S. Bank Wealth Management in Minneapolis.
The other major stock indexes also rose. The Standard & Poor's 500 rose $14.88 to close at 1,513.08. The Nasdaq composite index finished up 37 at 3,179.10.
Despite the surge, market watchers were divided over what the Dow milestone or even what a Dow all-time high, which is quickly approaching really means. To some, it's an important booster to hearts and minds, making investors feel optimistic and thus more willing to bet on the market.
“The Dow touching 14,000, it matters psychologically,” said Peter Cardillo, chief market economist at Rockwell Global Capital in New York. “It attracts smaller investors.”
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And smaller investors, until the past few weeks, had been shying away from stocks. In the past three weeks, though, billions have flowed into mutual funds targeting U.S. stocks, according to the Investment Company Institute. Before that, investors had been pulling more cash from U.S. stock funds than they'd deposited for every month since April 2011.
To others, though, the Dow 14,000 is nothing but a number on a board, a sign more of how traders feel than how the economy is faring. And even then, it's not even the best number on the board, some traders say. Professional investors usually pay more heed to the Standard & Poor's main index, which tracks 500 companies compared to the Dow 30. The Dow, however, is more familiar to the general public.
Joe Gordon, managing partner at Gordon Asset Management in North Carolina, wasn't celebrating on Friday. He thinks the gains won't last. The fact that small investors are finally piling back in the stock market, he said, is a sign that it's getting overhyped and ready to fall.
After the Dow hit its all-time record in 2007, it fell almost steadily and a year later had lost nearly 40 percent of its value a year later.
“It is good trivia to talk about on television and the radio,” Gordon said, referring to the 14,000 mark. “It's meaningless to the average professional.'' And for workers still unemployed by the financial crisis, he said, “it really means nothing to them.''
If there's dissent over what Dow 14,000 means, what's undeniable is that it's a rare event: The Dow has crossed 14,000 only 15 times in its history, and the last time was more than five years ago, on Oct. 17, 2007. On just nine days has the Dow managed to stay above the 14,000 mark until the end of trading. Friday's gains also mean that the Dow is within striking distance of its all-time record of 14,164.53, which it reached on Oct. 9, 2007.
For the average investor, that was all back when the stock market still seemed like a party. Housing prices were starting to ebb but hadn't cratered. Jobs were abundant, with unemployment at 4.7 percent compared to 7.9 percent now. Lehman Brothers still existed. So did Bear Stearns, Wachovia and Washington Mutual.
The government jobs report that pushed stocks forward was mixed, but traders chose to focus on the positive. The U.S. said it added 157,000 jobs in January, which was in line with expectations. Unemployment inched up to 7.9 percent from 7.8 percent in December. But, encouragingly, the government also reported that hiring over the past two years has been higher than it originally thought.
A number of factors have propelled stocks hire in recent months.
Lawmakers reached a deal to temporarily avoid taking the country off the “fiscal cliff,” mandated tax hikes and government spending cuts that experts warned would badly damage the economy.
The Federal Reserve also shows little sign of ending its campaign to stimulate growth, with interest rates likely to remain low for the foreseeable future. That is helping fuel a rebound in housing and autos, among other key sectors. Automakers Toyota, Ford, GM and Chrysler all reported double-digit gains for January.
The debt crisis threatening the eurozone also has abated, if only for now, with Italy, Spain and other distressed economies in the currency union no longer in imminent danger. Emerging markets also appear to be firming up, with China seemingly dodging a “hard landing.”
But there were also reminders that Europe's debt problem is far from solved. The Netherlands was forced to take over one of its major banks, to try to stave off a collapse. In Greece, dock workers extended a strike over the government's spending cuts.