Dow Jones Breaks Into Record Territory

[robcon]

Source: Assoc Press

NEW YORK (AP) - Wall Street traded mostly higher Tuesday, pushing the Dow Jones industrials into record territory after a rise in home construction and a mild reading on consumer inflation encouraged investors to buy.

Read more: http://www.breitbart.com/article.php?id=D8OIG5E00&show_article=1

[soothsayer]

1. It'll hit 13,000, but that won't stop our troubling inflation

[Javaman]

3. It doesn't make sense. whole sale prices are up due to inflation reports

yet the market goes up?

More and more I am of the belief we are living in a fiat economy.

The fall will be very scary.

[MaineDem]

5. The Dow is how many companies?

This is not indicative of real-world economics, IMHO. I'm not an economist but I know what I paid at the grocerys tore last week and the week before and it's been steadily rising. My pension has not.

This tells nothing about what's really going on.

[Javaman]

6. You're right, but traditionally the market usually takes a dive on

a bad inflation report.

I know the market and reality every coincide but I just thought this was weird.

gas goes up, food goes up, property taxes go up, etc etc, but my paycheck stays the same and what I get loses value.

sigh.

[Tesha]

8. The DJIA is currently 30 companies.

http://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average

# 3M Co. (NYSE: MMM) (Diversified Industrials)
# ALCOA Inc. (NYSE: AA) (Aluminum)
# Altria Group Inc. (NYSE: MO) (Tobacco, foods)
# American Express Co. (NYSE: AXP) (Consumer Finance)
# American International Group Inc. (NYSE: AIG) (Full Line Insurance)
# AT&T Inc. (NYSE: T) (Telecoms)
# Boeing Co. (NYSE: BA) (Aerospace/Defense)
# Caterpillar Inc. (NYSE: CAT) (Commercial Vehicles & Trucks)
# Citigroup Inc. (NYSE: C) (Banks)
# Coca-Cola Co. (NYSE: KO) (Beverages)
# E.I. du Pont de Nemours & Co. (NYSE: DD) (Commodity Chemicals)
# Exxon Mobil Corp. (NYSE: XOM) (Integrated Oil & Gas)
# General Electric Co. (NYSE: GE) (Diversified Industrials)
# General Motors Corp. (NYSE: GM) (Automobiles)
# Hewlett-Packard Co. (NYSE: HPQ) (Diversified Computer Systems)
# Home Depot Inc. (NYSE: HD) (Home Improvement Retailers)
# Honeywell International Inc. (NYSE: HON) (Diversified Industrials)
# Intel Corp. (NASDAQ: INTC) (Semiconductors)
# International Business Machines Corp. (NYSE: IBM) (Computer Services)
# Johnson & Johnson (NYSE: JNJ) (Pharmaceuticals)
# JPMorgan Chase & Co. (NYSE: JPM) (Banks)
# McDonald's Corp. (NYSE: MCD) (Restaurants & Bars)
# Merck & Co. Inc. (NYSE: MRK) (Pharmaceuticals)
# Microsoft Corp. (NASDAQ: MSFT) (Software)
# Pfizer Inc. (NYSE: PFE) (Pharmaceuticals)
# Procter & Gamble Co. (NYSE: PG) (Non-Durable Household Products)
# United Technologies Corp. (NYSE: UTX) (Aerospace)
# Verizon Communications Inc. (NYSE: VZ) (Telecoms)
# Wal-Mart Stores Inc. (NYSE: WMT) (Broadline Retailers)
# Walt Disney Co. (NYSE: DIS) (Broadcasting & Entertainment)

Tesha

[MaineDem]

10. Thanks, I knew it wasn't many. n/t

[northzax]

11. it's just an index

of the richest companies. of course they are doing well, just like the richest people are. a better index of broad ecomonic growth is the S&P 500, an index of 500 firms, not just 30. the S&P 500 is up 19% since March, 2001. you have to look at broader indexes to find the real information. Remember, the Dow Jones IA is published by Dow Jones, the same people who run the Wall Street Journal. they want to find big companies that do well, and encourage people to buy. it's the whole point.

[MaineDem]

13. That was the point I intended to make

I didn't do a very good job though.

You did.

[northzax]

14. aw, shucks

I'm blushing. :)

[Orsino]

15. The market is not a measure of Americans' economic security.

It's a measure of how rapidly the rich are taking it from us, and from each other.

[Alcibiades]

9. If anything, it should make it worse

People who make money in the market will want to spend some of it, so we have more money chasing the same amount of goods, hence price inflation.

[OrangeCountyDemocrat]

2. MORONS! nt

[denverbill]

4. Yee-haw. It's up a staggering 25% since Shrubby took office, if I'm generous.

Assuming it was at 10,000, (it was more like 10,600), you get a 25% total return over more than 6 years. If my calculations are correct, that's an average annual return of 4%, and 1700 points of that 2700 came since August of last year, when it was obvious that the Democrats were about to retake the House and reestablish some fiscal sanity.

The Dow went from 3000-10000 under Clinton during his 8 years, a 230% total return. That's something like a 14% annual return over 8 years.

The Dow hitting records under Clinton didn't even make news. It was only when it hit some significant milestone (4000, 5000, 6000, 7000, 8000, 9000, 10000, 11000) that you even heard about it.

At least it's finally moving in the right direction anyway.

[Alcibiades]

7. Is up really the right direction?

Given that equity assets are distributed unequally, the growth in the Dow typically helps those who are better off, and the richest of the rich most of all. Given that many workers today don't even have a retirement fund account of any kind, a rising Dow does not lift all boats. There's also the question of whether stock markets themselves actually serve any real purpose other than to enrich investors, brokers and (most outrageously) top management, at the expense of workers and customers.

The trend here is the continuation of one begun during Reagan: long-term growth in the value of equity assets, coupled with stagnation of wages. There is a built-in bias on the part of the folks who manage the money supply in this country: any growth in wages is seen as inflationary and bad, but much greater growth in financial assets (of any type, practically) is rarely seen as inflationary, and is usually treated as good in itself.

We are seeing the economic downfall of the US as those things that produce real economic value are outsourced, always with the promise that there will be the "jobs of tomorrow" to replace them at higher wages. Those jobs never come, and, to the extent that they do, we are finding, surprise surprise, that they can be outsourced, too. And so they are. Marx's analysis of this, or, rather, his prognostication of this, is dead-on. He predicted that, as capitalism grew more "advanced," more and more capitalistic activity would move from actual production of things with use value to pure financial value: since nothing produces more value than fraud, these schemes would grow increasingly fraudulent.

The increase in the value of the Dow is moved at this time by companies that engage in resource extraction, an enterprise that contravenes the public good, in the sense that it transforms the resources of the planet (the inheritance of all humankind) into private profit, producing what economists call "externalities" (i.e. pollution and war) in the process. It's also driven by the increased profitability of companies that are reaping financial savings from cost-cutting moves such as outsourcing or cutting benefits. There has also been a history of increasingly sophisticated accounting that always makes these large corporations look as if they are doing better than they are (remember Enron?). Many of these companies are also firms that are benefitting because they do a lot of business in the rapidly expanding Chinese economy (Cat, Boeing). Also, there's a war on, and some of these folks are defense contractors, so they're doing well (GE, United Technologies). It's also going up simply because its going up: when people realize a profit from the sale of anything, including equity assets, that money has to go somewhere, and so much of it goes back into equities, further driving up prices--until, that is, one day it doesn't go up anymore.

I suspect that these forces are short-lived. To the extent that I had any money, I'd invest in Asia right now. The US economy is being run by knuckleheads, but the Chinese know what they are doing. I think the prospects for growth in equities and real estate are, in the medium term, not good in the US.

There was also the question of whether the Dow components are real companies. I've listed them below. They are real, all household names. There's all kinds of controversy about determining which companies make up the Dow, but, in the end, these firms are somehow representative of huge corporate enterprise in the US.

Pfizer
Verizon
Altria (One of them big tobacco companies)
AT&T
Citigroup
Merck
General Motors
DuPont
General Electric
JP Morgan Chase
Coca-Cola
Minnesota Mining & Manufacturing
Johnson & Johnson
McDonald's
Home Depot
Honeywell
Alcoa
Intel
Caterpillar
Procter & Gamble
United Technologies
ExxonMobil
Boeing
Wal-Mart
Microsoft
International Business Machines
American Express
American International Group
Disney
Hewlett-Packard

[Odin2005]

12. I'll bet that's equivalent to around 9,000 in 2000 dollars.

And I see the morons continue falling for *'s fake "Mild" inflation numbers. Are investors THAT stupid?

[ozone_man]

16. You're right.

The dollar is worth (against the Euro) 70.8% of what it was worth in July 1, 2000. That makes the high closing price of 12,786 worth 9,060 in 2000 Euro weighted dollars. In this country you might realize that significance by comparing the price of real estate in 2007 to that in 2000. You can't buy any more of a house with those inflated dollars, because the price of housing has gone up by (about) the same amount. Just don't try buying a house in Europe or you'll be in for a surprise.

http://research.stlouisfed.org/fred2/data/EXUSEU.txt