It took the Dow Jones industrial average more than a century to surpass 3,000 and four years to conquer 4,000.
In less than nine months, the best-known measurement of U.S. stock values is flirting with 5,000, a symbolic threshold that reflects the power of the 1995 rally on Wall Street.The Dow average gained 46.61 points or nearly 1 percent Thursday to close at 4,969.36. It was the sixth record close in the past seven sessions and the 59th record close of the year. The average was up about 5 points more in the first half-hour of trading Friday morning to the 4,974 level.
The average of big name stocks, such asBoeing, General Motors, and Procter & Gamble, has risen nearly 1,200 points or 30 percent since January.
"You don't go up 1,200 points if you're heading into a long, protracted slowdown," said Peter Canelo, an investment strategist at Natwest Securities in New York.
Most other broader market indicators also advanced Thursday. But as has historically happened when the Dow average approaches a round number, attention was focused on the index concocted by Charles Dow more than a century ago to measure the growth of America's industrial might.
"Investors have been fascinated by the Dow average since old man Dow invented it," said David Holt, who runs an investment services company named after himself in Arcadia, Calif. "There's no question the Dow will cross 5,000. It's just a function of when."
Brokers attributed part of the Dow advance Thursday to a monthly survey by the Federal Reserve Bank of Philadelphia, a barometer of broader trends, that reported a dramatic slowdown in business activity and a drop in prices.
Although this was seen as persuasive evidence of a weakening economy, it also suggested lower inflation, which gives the Federal Reserve more room to lower interest rates. That makes stocks a more alluring investment.
There is a widespread anticipation that the Fed will lower rates once the federal budget crisis that has paralyzed the government is resolved.
The Dow average is not the most accurate reflection of Wall Street vitality, but it's the most famous, widely quoted in 3-second sound bytes of stock reports.
Viewed over a period of decades, its ascent has accelerated, leading some forecasters to predict a 10,000 Dow by the turn of the century. It surpassed 1,000 in 1972, 2,000 in 1987 and 3,000 in 1991. After languishing through most of 1994, it surpassed 4,000 last February.
Canelo predicted that once the average traverses 5,000, the potent symbolism of that event alone would attract investors who are afraid they are missing out on a historic opportunity.
"It's the greatest free advertising in the world," he said. "If we get through it in the next week or so, you'll bring more money into this market."
Others called the Dow average's flirtation with 5,000 a strictly mathematical event that carries little substance by itself.
"As far as 5,000 goes, it's another nice round number, it creates excitement, but to me, it's no different than 4,999," said Richard McCabe, a stock strategist at Merrill Lynch & Co. "It's just another number along the way in a rising trend, but it's not a new era."