Dow 10,000

Positive earnings news from JPMorgan and Intel finally pushed the Dow industrial average to 10,000 for the first time in over a year, a climb of nearly 4,000 points, or 55 percent, from its March 9 low of 6,440.

The Dow closed at 10015, the first time since October 2008 it has passed the psychologically important number.

It’s just an arbitrary number, of course, this index of 30 large companies, but for traders, investors, and even for the small businesses that make up the backbone of the economy, a Dow at 10,000 breeds optimism and a belief that some semblance of normalcy has returned to the economy.

Recent polling by the City Business Journals Network, the advertising subsidiary of Portfolio.com parent American City Business Journals, shows small-business optimism closely linked to the Dow.

The strength of the market is a piece of economic news that is widely broadcast by credible sources every day, said Tania Henderson of Side By Side Consulting and a psychotherapist in the Denver area, so it’s little wonder that breaking the 10,000 mark is viewed universally as good news.

“When we add those two factors to a subject that is emotionally charged, like our pocketbooks, it is no wonder why small businesses are so swayed by the Dow,” she wrote to Portfolio.com in an earlier email exchange.

Indeed, for Howard Learner of Kaldi’s Coffee in St. Louis, “The Dow Jones is basically my mood ring.”

The last time the Dow stood at 10,000, on October 7, 2008, Wall Street seemed to be in the middle of a full-blown collapse, with the market crashing as the credit markets froze on news of the bankruptcy of Lehman Brothers. But since then, the government has taken a series of unprecedented steps to restore faith in the markets, from directly injecting money in the banks to complicated programs designed to get banks to lend to one another.

The long climb upward for the Dow, which began in March can be seen as one sign that those efforts have paid off. And it’s a welcome sign, since the economy is by most accounts in the middle of a jobless recovery, and unemployment is expected to climb above 10 percent before the job market starts to recover sometime next year. The Dow has climed 9.34 percent over the last 12 months and 13.6 percent for the year to date.

But the Dow is always a leading indicator, as investors try to predict the future performance of the companies in which they’re putting their money.

And the good news for the index as a whole isn’t good news for everyone.

The biggest losers of the last 12 months were General Electric Co. and Bank of America, not surprisingly two of the companies hit hardest by the financial crisis. GE’s financial arm took a beating. Bank of America’s stock was hammered when it merged with Merrill Lynch, big losses at the broker were revealed, and BofA had to take a second round of government money.

In the past 12 months, GE stock has fallen 23.767 percent as of its October 13 close. BofA stock had fallen 14.662 percent during the same period. Since the beginning of this year, BofA stock has rebounded, climbing 26.5 percent, while GE has stagnated, climbing 1.2 percent.

The biggest gainers of the past 12 months have been the Travelers Companies, Inc., which gained 57.443 percent during that period. So far this year, though, the insurer has only gained 6.2 percent.

American Express was the second-biggest gainer, adding 50.497 percent in the past 12 months. So far this year, the credit card company is up 87.8 percent.

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Kent Bernhard Jr. is News Editor of Portfolio.com