The Dow Jones Industrial Average, the most potent symbol of the American stock market's virility, has set a new all-time high, reaching levels not seen since the peak of the technology boom more than six years ago.
The index closed at 11,727.34 last night, just over four points above the previous record set on 14 January, 2000.
The move into virgin territory - after almost a week of flirting with the record - puts the strength of equities back in the public spotlight after several years where investor faith was shaken by corporate scandal, terrorism and the long post-dotcom bear market. And experts say it could prompt the return in numbers of the domestic private investor, after years when many have put their cash in emerging markets funds and commodities.
Yesterday's 57-point surge by the Dow - which is dominated by old-economy industrial stocks - was fuelled by developments in the commodities markets, where crude oil's recent sell-off accelerated. That lowers the energy bills for business, and will help lower the price of petrol, whose recent peak threatened to choke off consumer spending.
Oil tumbled more than two dollars yesterday to below $59 a barrel, its lowest level since February, because of ample fuel stockpiles in the US and the absence of disruption during the hurricane season. Although Opec's president, Edmund Daukoru, called for the cartel to cut output, there is little evidence that most members will join Nigeria and Venezuela in reducing production.
Stock market traders believe that prospects are set fair for the third-quarter earnings season, when companies will report their latest results, and for corporate profits in the rest of the year.
John Thain, the chairman of the New York Stock Exchange, said the Dow's record was a bullish sign. "It says the economy is healthy, earnings are going to be good, and it speaks to investor confidence," he said.
The relative cooling of the US economy this year has also eased inflation fears and raised the hope of a cut in interest rates next year.
The Dow sank 38 per cent from its peak to its trough in October 2002, as the US economy was in the grip of a recession. The terror attacks of 11 September, 2001, and the Enron and WorldCom bankruptcies sapped investor confidence, as did the build-up to the war in Iraq. However, the US economy's return to robust growth has been reflected in improved corporate profits and a boom in mergers and acquisitions. US deal activity reached $951.7bn (£504.5bn) in the first nine months of 2006, up 13 per cent on 2005 and closing in on the record $1.21 trillion in the same period during 2000, according to Dealogic.
Tobias Levkovich, chief US equity strategist at Citigroup, was among those yesterday warning that broader measures of the US stock market have yet to return to their peaks. While the Dow contains just 30 members, the S&P 500 remains 12 per cent below its record and the Nasdaq is still only half what it was at the peak of the dotcom bubble.
Microsoft and Intel are among the worst performers in the Dow over the past six-and-a-half years, down 51 per cent and 60 per cent respectively. The cigarette maker Altria is the best performer over the period, up 218 per cent.
"The Dow is just one statistic among many, and you have to remember that the S&P 500 is a far broader measure, but the Dow is most often referred to for describing the health of the stock market and the health of the economy," Mr Levkovich said. "Where I think it will be helpful will be overseas, and foreigners may turn their heads... It may make them rethink their asset allocation."Reuse content