Wall Street finally uncorked the champagne yesterday after the Dow Jones industrial average punched through 10,000 points and closed there for the first time, reaffirming that the longest running bull market in history charges on.
New York Stock Exchange Chairman Richard Grasso and Mayor Rudolph W. Giuliani banged the gavel symbolizing the close of the day and then threw baseball caps with "Dow 10,000" embroidered on the front as traders applauded and cheered.
In Baltimore, traders on Legg Mason's brightly lighted trading floor clapped and hooted as the Dow closed above the barrier.
"It did it. All right, all right," said Dennis A. Green, director of Nasdaq trading at Legg Mason Wood Walker Inc. Green smiled broadly as he collected a dollar from a wager with another trader. "It just had to be," he said.
The Dow, an index of 30 stocks of major companies, such as General Electric Co. and International Business Machines Corp., jumped 184.54 points yesterday, up 1.88 percent, to close at 10,006.78. It had passed the barrier in four sessions this month, only to retreat by the end of the day.
While many experts played down the significance of the Dow's feat, they are in awe of the strength and resilience of this 16 1/2-year-old bull market, which began in August 1982. Back then, the Dow was below 800 points. Since then, it has shot up nearly 13-fold. It has climbed more than 7,000 points since 1990, with most of the rise coming in the past 3 1/2 years.
"This one is one of the best runs in history," said Robert Brown, chief market strategist at Ferris Baker Watts Inc. in Baltimore. "It has been one of the sweetest bull markets. Even if you take it from 1990, it has done more than even the wildest bull would have thought."
Not everyone has been cheering for Dow 10,000. Some money managers and strategists say crossing the barrier is nothing more than a welcomed relief because the hype has been distracting. And 10,000 is less meaningful than when the index closed above 1,000 for the first time in November 1972, after briefly touching it in 1966.
"I think it is a nonevent," said James D. Hardesty, president of Hardesty Capital Management, a Baltimore-based money manager, which oversees about $400 million. "It is a milestone that we would all like to see crossed and put to rest. It is just another marker on the road toward prosperity; it is the four-minute mile; it is something to achieve."
Alfred Goldman, chief market strategist at St. Louis-based A. G. Edwards & Sons Inc., said breaking five digits gives the "media something else to write about other than Monica Lewinsky."
"It has been hyped so much," he said.
But pushing above 10,000 could give the market a psychological boost, Goldman said. It is "continued confirmation that the bull market is alive and well, and that is the important thing."
Yesterday's closing was not nearly as emotional as the March 18 nail-biter, when the Dow broke through 10,000 twice with minutes remaining in trading, only to disappoint investors by closing 2 1/2 points shy of the mark.
But not even the fighting in Kosovo could derail the Dow's charge yesterday. The index surged at the opening bell as investors anticipated corporate mergers. BP Amoco PLC said it was in talks to buy Atlantic Richfield Co, sending oil stocks higher. The financial and technology sectors also were strong.
Shortly before 2: 30 p.m., the Dow cracked 10,000, quickly fell below it, and then rallied. Then, with about 30 minutes left in trading, the Dow started to sputter.
"Oh no," shouted a Legg Mason trader. "They can't do it."
"They've got to do it this time," Green replied.
The Dow didn't disappoint, and neither did the other closely followed indexes, which also performed well.
The Standard & Poor's 500 stock index, a broad measure of the market, jumped 27.37 points, or 2.13 percent, to 1,310.17. The Nasdaq composite index, which is made up of many large technology companies, shot up 73.67 points, or 3.05 percent, to 2,492.84. It was driven by Microsoft Corp., Cisco Systems Inc. and Intel Corp., all of which had big days and have propelled the bull market higher.
Indeed, there are many experts who say the stock market will continue to rise. Goldman predicts that by fall, the Dow could reach 10,500 or 11,000.
Ralph Acampora, the chief technical analyst at New York-based Prudential Securities, expects the Dow to climb to 18,500 by 2006. Acampora initially predicted that the Dow would reach 10,000 points in June 1997.
"We are in a new bull market," he recently said. "This could be the start of a mega-market lasting 12 to 15 years, similar to the boom markets that followed the first and second World Wars."
Why are many experts so optimistic?
"It is the economy," said David Citron, a partner at Wagner Citron Management Corp., a Baltimore-based money manager with about $280 million. "The economy is going to keep bailing us out."
Inflation has been tamed, interest rates are low and the work force is nearly fully employed. In addition, corporate earnings have held up for the most part, and consumers continue to fuel the economy by spending.
"It is sort of like we are in the best of all worlds," Hardesty said. "You can't get much better. I like where we are. I am happy."
Another reason analysts are optimistic is that baby boomers keep pumping money into the market for retirement, and they are starting to inherit money from their parents that needs to be put to work.
"I think it is a big factor," Green said. "That group is just coming into their own."
Not everyone believes that the stock market will run higher. Edward Yardeni, chief economist at Deutsche Bank Research, is bracing for a "big drop" later this year, which could cause the Dow to plunge by as much as 30 percent.
Yardeni calls the stock market a "speculative bubble," and he expects it to fall because of year 2000 computer problems.
Many others acknowledge that the bull market's health is not as robust as it should be because there are few companies driving it higher.
"You have a terrible technical problem in that the market is very narrow," Brown said. "The generals are becoming fewer and fewer and the troops are falling further and further behind."
The stocks that continue to push the market up are the same names: IBM, Dell Computer Corp., General Electric, Microsoft and America Online.
If investors stuck with smaller stocks, they would have missed the last 12 months of the run in the stock market. The Russell 2,000 index, which tracks the performance of small-company stocks, is down 5.26 percent for the year.
Citron believes that the blue-chip stocks will continue to rise, but there will be some bumps along the way.
"We are definitely going to have a correction," he said. "If we closed our eyes for the next 10 years, and stick everything in a drawer, we'd be very happy when we opened it again."
Pub Date: 3/30/99