Dow up nearly 100% from bear market lows of March 2009

NEW YORK -- The Dow Jones industrial average broke through the 13,000 barrier for the first time since May 2008 in early trading Tuesday, extending its gains since the bear market low to nearly 100%.

Crossing the big round number is likely to provide a jolt of confidence to investors, who have been in fear mode for years following the worst financial crisis since the Great Depression. It is the latest sign that financial markets are stabilizing.

"Dow 13,000 is telling us that the fears, and all the financial Armageddon stories, might have been overdone," says James Paulsen, chief investment strategist at Wells Capital Management.

If fears continue to lift and confidence levels keep building, investors could return to their risk-taking ways and start investing more aggressively again, adds Paulsen.

A rising Dow "could give individual investors the animal spirits to act," Paulsen adds.

The Dow, the best-known and most closely followed stock barometer in the USA, has now nearly doubled since hitting rock bottom on March 9, 2009, in what was the worst bear market since the 1930s. It is up nearly 99% since its low.

The Dow finally crossed 13,000 around 11:24 a.m. ET, causing a cheer to rise from the floor of the New York Stock Exchange near Wall Street. In afternoon trading ,the Dow was still up but dipped back below 13,000.

The Dow last closed above the key psychological 13,000 level on May 19, 2008, when it finished at 13,028.16.

The stock market has been helped by better news out of Europe. Early Tuesday, Greece and euro zone leaders agreed on a bailout loan of 130 billion euros, removing the threat of a Greek default, financial chaos in Europe and potential contagion around the world.

Stocks have also been benefiting from an ongoing economic recovery, historically low interest rates and stocks trading at below-average price levels vs. corporate earnings.

On a more sober note, the blue-chip measure of 30 stocks first closed above 13,000 on April 25, 2007. That means the Dow has gone virtually nowhere over the past four years.

The significance of the Dow rebounding so far in such a short period of time is now being debated on Wall Street.

Richard Moroney, editor of Dow Theory Forecasts newsletter, says the Dow's climb is no doubt a psychological positive. But he says a more powerful number will be when the Dow closes above its old high of 14,164.53 it celebrated on Oct. 9, 2007.

"Dow 13,000 doesn't have the impact of a new all-time high," says Moroney.

Moroney would also like to see other key stock indexes hit new highs as well, which would better confirm that the uptrend remains in place. For example, Moroney said it would be a better sign if the Dow Transportation average, which is filled with trucking, railroad and aviation companies that move goods and services across the globe, would also take out its old high of 5618.25 that it hit on July 7, 2011. But the index was trading at 5182 Tuesday, or roughly 8% below its 2011 high.

Still, the broader Standard & Poor's 500-stock index climbed to a new bull market high Tuesday, surpassing its April 29, 2011, high of 1363.61, another good sign that market breadth is strong.

Investors now must wrestle with the question: Is it too late to get in? Or is this the start of a second leg up for stocks?

A rising Dow, says Paulsen, could change the dialogue from, "I don't want to own stocks because I want to sleep at night," to, "Am I missing out on gains?" says Paulsen.

A surge in oil prices could cause the Dow's advance to slow. A barrel of oil was fetching nearly $105 a barrel in Tuesday trading.