Dow nears 13,000; record possible

Market reacting to signs U.S. economy is getting back on its feet.

Trader Kevin Lodewick (right) works on the floor of the New York Stock Exchange. A strong one-day rally could put the Dow Industrial Average over the 13000 mark.

Richard Drew/Associated Press Trader Kevin Lodewick (right) works on the floor of the New York Stock Exchange. A strong one-day rally could put the Dow Industrial Average over the 13000 mark.

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By Christina Rexrode, Associated Press Updated 8:55 AM Wednesday, February 8, 2012

NEW YORK — It was just last summer the Dow Jones industrial average shed 2,000 points in three terrifying weeks. Investors had a host of things to worry about, including the possibility of another recession. Now the Dow is within reach of the rarefied 13,000 mark — a level it hasn’t seen since May 2008, four months before the financial system almost came apart.

A strong one-day rally — caused by a deal on bailout money for Greece, perhaps, or an unexpectedly positive economic report — could put it over the top.

What’s more, the average is just a 10 percent rally from an all-time high. And 10 percent rallies can happen fast these days.

The stomach-turning summer is a bad memory. Europe appears to be getting its act together, last summer’s downgrade of the U.S.’ credit rating was quickly forgotten, Washington is mostly behaving, and recession fears are gone.

“There are signs that the economy is getting back on its feet and the market is reacting to that,” says John Prestbo, executive director of Dow Jones Indexes.

On Wall Street, too. The Dow traded Tuesday at 12,886, a 21 percent rally from Oct. 3, its low point for last year. In January, the average rose more or less in a straight line and added 3.4 percent, its best start to a year since 1997.

From here, the record is tantalizingly close — 14,164.53, reached Oct. 9, 2007, when the investment houses Bear Stearns and Lehman Brothers still existed and the unemployment rate was 4.7 percent.

Though there’s a long way to go to get the country back to economic health, there are pockets of encouragement. Unemployment is still 8.3 percent, but it’s the lowest since February 2009. Economic output grew every quarter last year.

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