Dow Finally Back at 11,000: So What?

Confidence matters

Last Friday, the Dow Jones hit 11,000 for the first time since September 2008, and on Monday it managed to close above this watershed. What does that actually mean, though? Commentators are divided on whether this psychologically significant milestone heralds a more concrete recovery.

• Number Says Nothing in Particular  At The Washington Independent, Annie Lowrey points out the obvious: "the number 11,000 is no more meaningful than, say, 7 or 912,384." The "macroeconomic fundamentals" remain what they were.
  

• Boosts Confidence, argues Adam Shell at USAToday. Sure, the economy is still struggling, but "economists say a sharp rise in stock prices and the resulting rise in the value of stock portfolios and 401(k)s held by Main Street investors could create a feeling of financial well-being," giving the economy another bit of a push.

• Is there Confidence, Though?  The Atlantic's Daniel Indiviglio looks at "hedging behavior" that "could indicate that ... investors know they are enjoying the upside of an unsustainable bubble."

• Entices Investors Back to Stocks  The Wall Street Journal's Paul Vigna also thinks the psychological effect of the number is important, but for a different reason: "These big, round numbers always attract attention, and the bulls hope this one will be enough to convince all those recalcitrant investors to come back to equities."
  

• 11,000? That's All?  Actually, points out Time's John Curran, the day's gains were "a mere 8.62 points or 0.08%, hardly the kind of jump you would hope for on news that Greece was going to be rescued." He also notes that "the Dow's good news was not endorsed by its bigger cousin, the S&P 500."

• Interpreted With the Help of a Timeline  The Washington Post's Frank Ahrens, though he tempers the good news with warnings from financial analysts over a "bit of a market pull-back," explains what this number means for investors:
  

The Dow is working to recover to its historic high of more than 14,000, hit in October 2007, when the collapse began. At 11,000, that means the Dow is about 78 percent back to where it was at its peak. And, if you didn't shuffle around your retirement investments and other portfolio holdings too much, you know that you're about 78 percent back to being whole, too.