New York – The Dow Jones industrial average swept past 14,000 for the first time Tuesday after a mostly tame inflation reading gave investors reason to extend an extraordinary – but perhaps questionable – Wall Street rally.
The stock market’s best-known indicator crossed 14,000 in the first half-hour of trading, though it didn’t close above that level; it did, however, manage its fourth record close in as many sessions. The Dow rose as high as 14,021.95, before settling back to 13,971.55, up 20.57. The Dow has taken just 57 trading days to make the trip from 13,000.
Stocks have risen fairly steadily since the spring amid buyout news and evidence that despite higher fuel prices and the ongoing problems in the housing market and mortgage lending industry, consumers are spending and companies are still finding room for growth.
With the Federal Reserve ever vigilant about inflation, any news that prices are rising at a moderate pace has added to the market’s momentum, as it did Tuesday.
The release of generally upbeat earnings reports also helped reassure a market that had worried that a slowing economy and rising energy prices could cut into corporate profits.
But the Dow’s latest accomplishment does raise questions about whether investors are buying more on speculation than fundamentals – and whether these gains can hold.
The market still faces issues, including rising oil prices, that could crimp consumer spending. And a drop in takeover deals could puncture investor sentiment, as could a further souring of subprime loans amid a cooling housing market.
The past week shows how easily swayed Wall Street can be. A week ago, the average tumbled nearly 150 points after investors received a handful of disappointing profit forecasts.
Only two days later, on Thursday, the Dow barreled 283 points higher as investors put a positive spin on a generally lackluster batch of retail sales reports.
Broader stock indicators ended mixed. The Standard & Poor’s 500 index slipped 0.15, or 0.01 percent, to 1,549.37 having set its own record highs in recent sessions. The Nasdaq composite index rose 14.96, or 0.55 percent, to 2,712.29.
Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange, where consolidated volume came to 2.96 billion shares compared with 2.70 billion shares traded Monday.
