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Major milestone: Dow finishes above 11K

April 6, 2010 12:00:00 AM PDT
A major milestone on Wall Street Monday as the Dow closed above the 11,000 mark for the first time in a year and a half. Some good economic news drove the average higher. The Dow Jones Industrial Average closed up more than 8.5 points, ending the day just under 11,006.Eleven-thousand is a number that's considered a benchmark for the stock market but I like to say it's just the number of opinions on how well the economy is doing. As you'll see there are some very positive signs, and some, well, not so positive.

Investors took the bull by the horns and rode it right past the 11,000 point mark Monday after days of flirtation, even hitting, then dropping back below the mark on Friday. But Monday the Dow Jones Industrial Average closed above that magic number, putting the Dow up nearly 70 percent since its low last March. A number of factors are driving the rebound.

"What we're getting are all sorts of little things like decent auto sales figures, the fact that we had really positive job growth figures, the fact that investors appear to be a little bit more confident and are putting their money back in the stock market, these are all signs of an economy that is in a recovery phase," said economist Charles Herman.

And last month's economic numbers back this up. According to the Labor Department, employers added 162,000 jobs, the largest job gain in three years. And chain-store sales were up 9 percent, too, the largest increase in more than a decade.

"The stock market can often be an indicator for the average American of how the economy is doing," said Herman. "I might be more willing to go out and spend some money. When they spend, that gets the economy going and employers hiring and the stock market going up even more."

But Jack Kyser, the chief economist with the Los Angeles County Economic Development Corporation, says consumers shouldn't get too excited just yet.

"You've got to be careful when you're dealing with the stock market because the market is a very emotional creature, and it can turn on just the smallest little rumor out there, so you have to sort of stand back and watch things over a period of time," said Kyser.

But even though California's unemployment numbers are very high, there is hope as L.A.'s entertainment and movie industries are showing signs of recovery.

"FilmL.A. just reported that on-location production activity was up in the first quarter of this year -- overall a small amount, but a very, very significant gain in television-pilot production, big gain in commercial production, because the advertisers are coming back, the auto industry is advertising again," said Kyser.

Some other positive signs here in California have been in health services, education and temporary help -- all are seeing employment increases. But the government's experts, who called the recession in the first place, are not willing to say we're out of the recession just yet. So be cautious as you decide how to invest.


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