(NEW YORK) — The Dow Jones industrial average reached a record high Tuesday at the opening bell, surpassing a key level in its recovery from the 2008 financial meltdown.
The Dow surged 147 points to 14,275 at 11:43 a.m. ET, topping the previous record high of 14,164 achieved on Oct. 9, 2007.
Since the last record, the housing market collapsed, the economy has stumbled through years of slow growth and high unemployment, and the country has experienced the worst financial crisis since the Great Depression. The national debt has also skyrocketed during that time, from $9.4 trillion to $16.6 trillion.
An index of 30 of the largest U.S. companies, the Dow is a widely-watched indicator of the “blue-chip” companies trading in the stock market. It has more than doubled from its low reached in 2009 after the government bailed out the major banks, which were crushed under the weight of bad mortgages fueled by easy-lending policies.
Stocks have been in a five-year bull market, helped by the Federal Reserve, which has kept interest rates near zero to assist in the recovery of the housing market.
Scott Brown, chief economist with Raymond James, said there is “nothing magical” about the Dow Jones industrial average reaching a record.
“The broader market has already been strong. However, the media attention may help to support consumer confidence. The stock market is a leading economic indicator,” he said.
Wealth effects should add to consumer spending, although the stock market wealth is concentrated at the upper end of the income scale. By contrast, the payroll tax increase and higher gasoline prices have not had a strong impact, he said.
“We may see a tale of two economies in the near term. The middle class is squeezed by the payroll tax hike and the increase in gasoline prices. However, the housing market is improving and replacement needs will continue to drive vehicle sales,” Brown said. “Business investment is supported by continued growth in corporate profits and an inventory rebuild may help support GDP growth in 1Q12. Government austerity and a soft global economy aren’t going to help. In short, a mixed bag.”
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Rob McLean and Joshua Berlinger, CNN
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Kathryn Vasel, CNN