The stock market hit some major milestones this week: The Standard & Poor's 500 index reached its highest level in more than three years, the Dow Jones industrial average settled in above 13,000 — up about 24 percent since early October — and the Nasdaq rose to its highest level in 11 years. Still, the Federal Reserve has been warning not to get too excited about where the economy is headed next.
David Kotok, chairman and chief investment officer at Cumberland Advisors, says there are a bunch of reason for stocks to be rising.
Millions of Americans are still searching for jobs or facing home foreclosures. For them, the Great Recession drags on into its fifth year.
But for others, the U.S. economy is looking up.
Companies in certain sectors are buying equipment again and hiring workers. These pockets of strength — found in energy, technology, manufacturing, autos, agriculture and elsewhere — are helping invigorate the broader economy.
Turn on the news on any given day, and you're likely to hear about the Dow Jones industrial average. It is the most frequently checked, and cited, proxy of U.S. economic health. But a lot of people — maybe most — don't even know what it is. It's just the stock prices of 30 big companies, summed up and roughly averaged. That's it.
And what does the daily movement of this number have to do with the lives of most Americans? Not much.