Friends
Stocks rocketed to the upside right from the beginning of trading this morning to take out the 2007 high in the Dow Jones Industrial Average. The bulls had the record high in their sights for days now, so it wasn’t a real surprise that the old high was going to be overtaken at some point. After a quick 150 point rise in the Dow, stocks spent the rest of the day drifting sideways and then giving some of the gains back on somewhat unimpressive volume.
For the day, the Dow was up 126 points to close at 14,253. The S&P 500 was up 14 points to finish the day at 1539. Gold was up $3 to trade at $1575 per ounce, while oil was up $.76 to trade at $90.88 per barrel WTI. The S&P still has yet to reach its old high, and NASDAQ may take many more years to ever see 5000 again.
Let’s take a moment to look back to 2007 when the Dow last traded at these levels and compare the conditions. On the negative side (the bears are always louder), GDP growth was about 2.5% then as compared to about 1.5% now. There were less than 7 million unemployed workers back then as opposed to about 13 million now. U. S. debt was about 38% of GDP back then as opposed to about 74% now, and total debt outstanding was about $9 trillion vs. about $16 trillion today. On the positive side of the ledger, earnings for the S&P 500 was about $82 per share as vs. over $100 today, and interest rates as measured by the 10 year treasury note are less than 2% today vs. over 4% back then (lower rates allows stocks to be valued higher). The moral of the story is, things are different than they were 5 years ago. It’s not a clear cut case of better or worse.
One economic note was a very pleasantly surprising ISM non-manufacturing survey number that came out this morning. Another positive on the side of a recovering economy. Well, it is an historic day. I guess one’s perspective dictates how one views today’s market. Are we simply getting back to even after five years, or is this the beginning of something new (a secular bull market)?
Have a nice evening everyone
