The fourth time was the charm for the Dow Jones industrial average Monday as that most venerated of all stock market indexes closed above 10,000 for the first time.
The Dow had passed 10K three times before earlier this month but had always retreated before the close of trading. This time, it reached 10,006.78 and stayed there.But not for long. At 11 a.m. (MDT) Tuesday, Dow10K was once again receding in traders' rearview mirrors, as the Dow was down 73.82 at 9,932.96, up from an earlier 132-point loss. The market turned south after Coca-Cola, one of the Dow 30, announced its worldwide soft-drink sales declined in the first quarter.
Coke shares promptly fell $3 on the news, trimming more than 10 points off the Dow. Broader indicators were mixed.
With the market at these rarefied levels, companies find they constantly have to surprise the market with better earnings than expected. When they don't, they're immediately pummeled and usually take a lot of other stocks down with them.
Still, Federal Reserve Chairman Alan Greenspan and his monetary policy board were meeting Tuesday, and if, as expected, they leave interest rates unchanged, the Dow's drop back into four-digit territory could be short-lived.
The Dow first broke through 10K on March 16, setting off brief celebrations in brokerage offices everywhere. On Monday, they once again broke out the champagne to toast the arrival of a "new era."
But the real news was probably the fact that the S&P and Nasdaq handily bested the Dow on Monday. While the Dow gained 1.08 percent, the S&P increased 2.13 percent and Nasdaq 3 percent. Many analysts have been quick to point out in recent months that the bull market of the past year has been limited to a fairly small number of big, household-name stocks. Monday's rally was pretty much across the board.
Still, it's the mythical Dow that captures the headlines and sets the tone for how most people feel the market is doing -- even professional traders.
Many of the market bears, and they are legion, are issuing dire warnings that the market is grossly overpriced and anyone who dares to "speculate" in stocks is surely doomed.
The market bulls retort that anyone who had listened to the naysayers over the past few years would have missed out on the biggest investment opportunity of this century.
John Williams, vice president and branch manager for the Salt Lake City office of discount brokerage Charles Schwab and Co., repeats the rational mantra that the stock market, in the past and in the future, is the only place to be for the long term -- and by "long term," he means three to five years, not 20 or 30 years, as Fidelity Investments guru Peter Lynch espouses.
"There are a lot of earnings out there and a lot of money on the sidelines," Williams said Tuesday. "Investors are more educated now. A lot of them have money in 401(k) retirement plans and you just don't see the panic today with big market swings that you saw back in 1987." He was referring to "Black Monday" -- Oct. 19, 1987, when the Dow plunged 508 points to 1,700, a 22.6 percent loss in one day.
Many then-famous market bears pointed to Black Monday as proof that a Dow of more than 2,000 was way overvalued and couldn't possibly reach that plateau again in this century.
Oops. The Dow made up its Black Monday losses 18 months later, went over 3,000 at the end of 1991 and has been moving inexorably to 10,000 ever since, albeit with the inevitable short-term volatility.