NEW YORK — The stock market broke through two milestones Monday before giving up nearly all its gains late in the day. Stocks rose from the opening bell, lifting the Dow Jones industrial average above 16,000 for the first time and the Standard & Poor’s 500 index past 1,800, two big markers in a historic bull market.
“The market is always a little hesitant when it gets to round numbers,” says Ed Cowart, managing director at Eagle Asset Management. “You don’t want to be the first guy buying at 16,000 on the Dow.”
The Dow managed to eke out a gain over Friday’s close with a late push higher, ending just 24 points shy of 16,000. Both the Dow and the S&P 500 are on track for their best year in a decade and have soared more than 140 percent since bottoming out in the Great Recession more than four years ago. Investors have pushed stocks up sharply this year as the U.S. economy improves, companies report record profits and the Federal Reserve keeps up its easy-money policies.
“The Fed is still pumping money into the system, which is helping fuel the market,” says Frank Fantozzi, CEO of Planned Financial Services, a wealth manager. “There’s much more confidence in the market.”
The Dow has risen for six weeks straight and is up 22 percent so far this year. The market hasn’t risen that much in a whole year since 2003.
The Dow has closed above round-number milestones two times this year: 14,000 in early February and 15,000 in early May. The quick climb has led some experts to wonder whether stocks are too high and set to tumble.
Brad McMillan, chief investment officer for Commonwealth Financial, says he’s not worried yet, but notes three ingredients of market froth are already present: investors borrowing record amounts to buy stock, more companies going public for the first time and Main Street investors putting money into the market after years of pulling out.