Bold bulls: Dow makes another run at 2010 high
This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.
Buoyed by surprising strength in Chinese and U.S. manufacturing-activity indexes for October, the Dow Jones industrial average again is flirting with its spring high of 11,205.
But after it topped that level early Monday, some investors and/or traders decided to back away, in a replay of the market action of Oct. 25.
The Dow rose as high as 11,244 in the first half hour of trading, a gain of 126 points, after a report showed that Chinese manufacturing expanded last month at the fastest pace in six months. That fueled a strong stock rally across most of Asia and bolstered hopes that the global economic expansion would roll on.
Wall Street also got a lift from the October manufacturing data reported Monday by the U.S. Institute for Supply Management. The group’s index of activity rose to a five-month high of 56.9 from 54.4 in September. Any reading above 50 indicates expansion.
But market players may have quickly remembered that they’re supposed to be frozen in place awaiting the outcomes of Tuesday’s elections and Wednesday’s Federal Reserve meeting. The Dow had pared its rally to 43 points, at 11,160, at about 11:10 a.m. PDT. Most broader indexes also were clinging to small gains.
The Dow’s closing high for the year was 11,205 on April 26, when it was riding a wave of optimism about the economic recovery, before the spring slowdown took hold. The April peak was the index’s best level since Sept. 19, 2008 – just before the market went into the freefall triggered by the financial-system meltdown.
The powerful rebound of the last two months has been underpinned by renewed optimism about the economy and by expectations that the Fed will try to continue driving down long-term interest rates via so-called quantitative easing (i.e., printing money). The central bank is expected to detail its plans after policymakers conclude their meeting Wednesday.
The Dow briefly traded above 11,205 on Oct. 21 and again on Oct. 25 before falling back. So far on Monday, the third time isn’t looking like the charm. But the surprise is that market bulls were bold enough to try even with the elections and the Fed meeting looming.
-- Tom Petruno