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Saturday, Oct. 25, 2014

Dow Jones anticipated to remain firm in '06

Thursday, January 12, 2006

SIKESTON - Local financial advisors look for the equity market to remain strong followingthis week's cross over the 11,000 mark in the Dow Jones.

"I'm looking for a positive year this year for the equity market," said Dean Wooden, an independent financial advisor at Raymond James Financial Services in Sikeston. "I think the economy is much stronger and has been stronger than what people have anticipated."

For the first time since before the 9/11 terrorist attacks, the Dow Jones industrial average crossed 11,000 Monday, buoyed by a rally that has sent stock prices soaring through the first five sessions of 2006.

"It's just great - it's been a long time coming," said Mike Bohannon of Raymond James Financial Services in Sikeston. "We're finally recovering from 9/11 and it's a real positive."

Wooden agreed, "We've been looking for it for about two-and-a-half to three months."

Wall Street's best known stock indicator reached 11,003.50 shortly after 2 p.m., the first time since June 13, 2001 that the index of 30 blue chip stocks traded above that milestone. It last closed above 11,000 on June 7, 2001, when it stood at 11,090.74.

The indicator remained high - it closed out at 11,011.58 on Tuesday and 11,043.44 on Wednesday, according to Wooden.

"Eleven thousand is a significant level and once you surpass that level, it becomes easier to stay at it or go through it again if the market would come down," Bohannon said.

A major turning point last week changed investors' moods with the release of minutes from the Federal Reserve's last policy-making meeting. At that meeting, the Fed's Open Market Committee signaled that its string of interest rate hikes dating back to the summer of 2004 would soon end.

Economic factors also helped lead to the milestone. For instance, inflation remains low and the unemployment rate is between 4.9 and 5 percent, which Wooden described as "extremely low."

Being part of a global economy also helped. Wooden said that while there have been job losses in the auto market in Detroit, they are being replaced with jobs from foreign manufacturers who are coming to the United States.

"The market is recognizing the fact that the economy is doing quite well," Wooden added. "Our economic numbers are all very positive and I think the equity market is starting to recognized that more than anything else."

The Dow came within 16 points of 11,000 last March 7, but fell back amid worries about inflation and higher oil prices, concerns that dogged the market for much of 2005.

Following a post-Sept. 11 drop, the markets rebounded strongly in 2003, then posted modest gains in 2004. The Dow ended 2005 with a slight loss while the other major indexes edged higher; every time stocks made a significant advance last year, concerns about the impact of record high oil and gasoline prices on inflation, consumer spending and corporate profits sent the market retreating.

"(The stock market) was able to digest the hurricanes quite nicely and the shock of oil, which is going to continue for awhile," Wooden said.

The advance, despite last year's concerns, didn't surprise Bohannon, either. "We're world leaders," he said.

This milestone also has implications and gains for Southeast Missouri residents. Retirement plans, such as 401ks and individual retirement accounts (IRAs) will appreciate in value, Bohannon said.

Wooden agreed. "There certainly is help here on a local basis for anyone who has a retirement plan in the equity market."

The Associated Press contributed to this report