The Dow crossed 10,000, and suddenly Wall Street's bears grew quieter.
The widely-watched Dow Jones Industrial Average returned to a five-digit number for the first time since Oct. 3, 2008 on the back of a strong earnings report from JPMorgan, a better-than-expected September retail sales report, and a tech rally, fired up by Intel's strong earnings and forecast.
The Dow rose 144 or 1.5 percent to 10,015, while the S&P 500 climbed 1.8 percent to 1,092, also the highest close since last Oct. 3. Financial stocks jumped 3.4 percent, and tech was up about 1.5 percent.
But is the Dow's year high a sign of encouragement or an exit point for investors?
Unlike its last two major trips above 10,000, the move is being met by a sea of skepticism. Yet anecdotally, more traders seem willing to believe that the market can continue in an upward trend for now, drawing strength from corporate earnings. And that’s despite the sluggish economic recovery and growing unemployment. The Dow is up 53 percent since its March low.
BlackRock Vice Chairman Robert Doll also says the direction for stocks is higher for now.
"There's a huge wall of worry,” Doll said on CNBC’s “Special Report: Dow 10,000.” “There's so much money on the sidelines, waiting for the pullback. We don't get it, t-the market goes up, and people have to put some money in."
"Look, there are a bunch of concerns out there. They are very legitimate, but in the short run, the cyclical positives are overwhelming that,” Doll said. “When you get a JPMorgan, an Intel, a CSX, among others, reporting better-than-expected earnings, guess what? Stocks go up."
Thursday's market will take its guidance from the financials. Wall Street profit machine Goldman Sachs reports earnings ahead of the bell, as does Citigroup , still a participant in the government's trouble asset relief program (TARP). After the bell reports belong to tech. Google , Advanced Micro Devices and IBM all release numbers just after 4 pm New York time.
Closely watched weekly jobless claims are reported at 8:30 am, as is the consumer price index and the Empire State survey of New York manufacturing activity. The Philadelphia Fed survey is released at 10 am.
"For sure, the stream of economic data will take a back seat for the most part. Google will be intriguing. Goldman Sachs will be better than expected. Citigroup is a wild card," said Art Hogan of Jefferies.
Nokia , Charles Schwab , Safeway , Harley Davidson , Southwest Airlines and Winnebago also report.
Hogan also said he believes the stock market will continue to move higher, at least temporarily.
"I think we continue to ramp up through the earnings season," he said. Then when earnings season ends, the challenges will be a lack of catalysts and concern about corporate profits in 2010.
The first time the Dow closed above 10,000 was March 29, 1999, where it remained until May, 2002. It was a time of optimism. The stock market was full of opportunities and the technology bubble was just getting started.
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The second time the Dow crossed back above 10,000 was December, 11, 2003. It was real estate then that was just starting to bubble, pumped up by the Fed's easy ways after the Sept. 11 attacks. The Dow moved back and forth across the 10,000 mark but stayed above that level steadily from Oct. 27, 2004 until Oct. 3, 2008. The highest close ever was 14,164 on Oct. 9, 2007, well after the credit crisis first appeared.
Technically, Dow 10,000 is meaningless, but traders say it still has a psychological value as a big round milestone.
"There's a big population that doesn't necessarily focus on this all the time and has been disenchanted with Wall Street. This is a reminder that things have gotten better," Hogan said.
Another reminder that things have gotten better was the Wall Street Journal's report Wednesday that Wall Street bonuses are back and bigger than ever. That topic will no doubt be big around Goldman Sachs’ earnings report. The firm is expected to report earnings of $4.20 per share on revenues of $10.9 billion.
As stocks rose, the dollar took a beating and bonds sold off. Gold was slightly lower, but oil gained 1.4 percent, taking it to $75.18 per barrel, its highest close of the year. The dollar slipped 0.6 against the euro, to a level of $1.4919.
Treasurys, meanwhile, saw sellers along the curve.
"We tried to trade higher and the long end had a bit of a bid coming out of the FOMC (minutes) and then it kind of turned around," said Brian Edmonds, head of interest rate trading at Cantor Fitzgerald.
Edmonds said the market will be watching claims and CPI, which is expected to be tame. He also said the bond market has seen some swift moves recently. Treasurys traded lower at the end of last week, then higher Tuesday and down again Wednesday. The 10-year was yielding 3.425 percent, up from 3.314 Tuesday.
"We kind of all thought last week one market had to be wrong, either equities or fixed income ... If you look right now, you say fixed income had it wrong," he said.
"It pretty much showed that maybe equities were right short term. The earnings were good. That certainly is driving the stock market, and we're (bonds) not being supported by the stock market. That's certainly taken some of the wind out of the sails," he said.
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