American share prices reached the brink of an all-time record yesterday, as the Dow Jones clawed its way to within two points of a high set more than six tumultuous years ago.
Investors who have endured the trauma of the dot.com bust and the shock of the September 11 attacks, twice pushed the index over the 11,722.98 closing record set on 14 January 2000.
And as it settled finally up 29 points at 11,718.45, traders appeared willing to shake off the growing uncertainty over the path of the US economy in the remainder of the year and into next.
Earlier, second-quarter GDP had been revised down from 2.9 per cent to 2.6 per cent, and George Bush's chief economist warned the slowing housing market was acting as a "significant drag" on the economy in the third quarter of the year. However, Edward Lazear said there was no evidence that the house price slowdown was affecting other parts of the economy.
The Dow has been propelled higher in recent weeks by the slump in oil and gas prices, which has lowered the costs on business and freed up drivers to spend money they might otherwise have needed to fill up petrol tanks, and by a halt to more than two years of interest rate rises by the Federal Reserve. Traders have also been keen to push the stock market up to flatter their quarterly returns at the end of this month.
When the Dow set its record close, investors were still chasing technology stocks to sky-high levels and were yet to experience the Enron and WorldCom scandals that rocked confidence in corporate America. The two-and-a-half year bear market that ensued took the Dow down to 7,286.27 at its worst.
John Thain, the chairman of the New York Stock Exchange, predicted further strength in the coming days and months, and the flirtation with new records could tempt long-sceptical investors back into the stock market.Reuse content