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Dow's spring fling

The leap to the 13,000 milestone was quick, but will it last?

By Helen Huntley, Times Personal Finance Editor
Published April 26, 2007

Chalk up another milestone for the stock market: The Dow Jones Industrial Average pushed through 13,000 Wednesday as investors cheered stronger-than-expected earnings reports.

The blue-chip barometer gained 135.95 points to close at 13,089.89. The move came just six months after the Dow crossed 12,000 and gives investors a gain of 5.03 percent for the year.

"It's a global spring fling," market strategist D.A. Davidson's market strategist Frederic Dickson told Bloomberg News. "It really caught investors by surprise who had low earnings expectations."

Economists and investors were expecting a slow start to the year, which was reflected in analysts' earnings projections. Companies such as PepsiCo, Corning and Boeing have delivered one pleasant surprise after another.

"There probably was a bit too much pessimism as we headed into earnings season," said Scott Brown, an economist at Raymond James & Associates in St. Petersburg. But he cautioned investors not to get overly excited.

"I wouldn't expect the market to go up and up and up from here," he said. "There's a lot more economic data coming down the pike. I don't think anybody is expecting the economy to get up and start running at 4 percent growth. It just doesn't seem possible anymore."

Big round numbers on the Dow don't have any particular significance in terms of market fundamentals, but they do have a psychological effect. If nothing else, they cause investors to pay attention and some to worry about missing out on gains.

"The market is definitely emotional," said Michael Pleasant, a Palm Harbor investor who is president of the Tampa Bay chapter of Better Investing, an organization that helps investors learn about stocks. When the market is on the upswing, more people turn out for meetings, Pleasant said. He says that's not a bad thing.

"It's never too late to begin investing," he said. "You can invest for the long term and you won't have to worry about whether it's up or down all the time."

The Dow's climb from 12,000 to 13,000 was a lot faster than the one from 11,000 to 12,000, which took 7 1/2 years, including a detour through a bear market.

Averages and indexes are measuring sticks that don't apply to every stock. In the Tampa Bay area, some stocks have done far better than the Dow, such as WellCare Health, which has soared 63 percent since the Dow first closed above 12,000.

Then, of course, there have been disappointments such as Quality Distribution, a transportation company that lost 40 percent of its value over the same period.

Information from Times wires was used in this report. Helen Huntley can be reached at hhuntley@sptimes.com or (727) 893-8230.

[Last modified April 25, 2007, 22:40:12]