Could the Dow Hit 13,000?
April 23, 2007 — -- Just a few months ago the stock market was plunging, but now it's hurling into record territory.
The Dow is less than 40 points away from 13,000, where no trader has ever gone before. The Dow broke three records last week and was up 15 of the last 16 sessions.
Leading this recent rally is a spate of earnings reports, showing that some major American companies are doing better than the market had previously thought.
"The good news is outweighing the bad news. … And the market is moving higher because the good news is earnings have been very solid," said Alan Skrainka, chief market strategist at Edward Jones.
Big first quarter profits from Google, eBay and financial companies helped ease some of the concern about the economy.
In the meantime, gas prices have been soaring and there has been a flurry of foreclosures, a home lending crisis that sent a wave of panic through the market.
Two months ago stocks dropped 416 points in one day, but now, investors seem to be saying, things may not be as bad as they thought.
"The market was very fearful that the housing industry would send us into a recession. Many of those investors who were worried about a market decline now are fearful of missing out on this big rally," Skrainka said.
Friday's close was the 34th record close since the beginning of October. The Dow first crossed 12,000 on Oct. 13, 2006, and first closed above that mark on Oct. 19, 2006.
Some bullish investors are still seeing this as a good time to get in.
"Good Morning America" financial contributor Mellody Hobson, however, is not so sure.
"I have two words this morning: Be careful," she said on "Good Morning America" today.
Hobson is mainly concerned that the housing market will continue to decline with new-home sales at their lowest in seven years. Hobson is also concerned that gas prices will continue to increase.
Still, Hobson did not advise investors to pull out of the market.
"You always need to remember that investing is a long-term strategy. Most investors end up losing money trying to time the market, so, you need to keep investing no matter what happens over the short term, good or bad," she said.
But for those already in the market, it might be a good time to consider taking some profits and redistributing the proceeds, Hobson suggests."I would say lighten up on the areas that have done very well," Hobson says, "Take that profit and move it to areas that you now have been weaker."
"Just don't get greedy," Hobson concludes, "...it can't last forever."
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