Hitting the Magic 10,000

It finally did it! The Dow finally breached the psychological 10,000 points.

Associated Press contributed to the report below:

The Dow Jones industrial average closed above 10,000 on Wednesday (14 Oct), a testament to the stock market's powerful rebound from last year's financial crisis but also to a lost decade that has left many individual investors worse off than they were 10 years ago.

Strong third-quarter earnings from bellwether companies such as JP Morgan Chase and Co and Intel Corp, powered the powered the blue-chip index up 144.80 points, or 1.5 percent, to 10,015.86, the capstone to a furious seven-month rally driven by hope that the punishing global recession is slowly giving way.

The retaking of the 10,000 level marks an improbable turnaround from a brutal bear market, when the Dow plunged 54 percent from October 2007 through early March in the wake of a meltdown in the home-mortgage market, a crash in housing prices and the worst downturn since the Great Depression.

The recovery has been paced by aggressive government activity that alleviated fears of a global financial collapse and resulted in largely improving economic data. The speed and intensity of the rally has spurred fear that stocks are outrunning the still-weak economy and could fall hard again if the economy succumbs to a double-dip recession.

Others point out that the market has consistently defied naysayers and can hold its gains. "There's still room to keep going," said Phil Roth, a market analyst at brokerage house Miller Tabak & Co. "You have be careful how you play the rally, but it would be a bigger mistake to fight it."

Still, reclaiming 10,000 highlights the deep scars that many individual investors have suffered over the last decade and underscores the sharp divide today between the renewed prosperity of Wall Street and the still-deep struggles of Main Street.

The Dow first crossed 10,000 in March 1999 before the popping of the Internet-stock bubble prompted a bruising bear market early this decade.

The Dow is up a spectacular 53 percent from the 12-year low it reached in March, but it must rise 41 percent from its current level just to match its October 2007 record high.

"In 1999, we thought this was the beginning of a rocket ship riding to Dow 20,000," said Art Hogan of Jefferies & Co. "This time around, we're hitting it because we've moved away from the edge of the abyss."

Now, Wall Street giants such as JPMorgan and Goldman Sachs Group Inc are notching blockbuster profits.

Yet consumers are still grappling with rising unemployment, shattered home values and decimated 401(k) retirement accounts.

The economic recovery could be slower and generate fewer jobs than previous recoveries have, producing an even more pronounced gap between economic haves and have-nots, said economist Allen Sinai.

"There's a dramatic night-and-day juxtaposition of a booming stock market and rich financial firms, and jobless Americans," Sinai said. "Part of the prosperity we're seeing on Wall Street is because of massive job losses, which preserve profits" of American companies.

What a paradox- a preservation of profits at the expense of massive job losses.

Is this the new American Dream?