Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Bulls Pull The Dow Higher as the S&P Hits Another Milestone

The Dow Jones Industrials (DJINDICES: ^DJI  ) rose 63 points on Friday, closing the week with a solid gain as investors continued to feel more optimistic about the prospects for the U.S. economy. Yet the real excitement in the stock market was in the S&P 500 (SNPINDEX: ^GSPC  ) , which closed above the 1,900 mark for the first time. For both stock indexes, market milestones have come at a furious pace over the past year or so, and despite calls for a Dow correction, there have been few signs of capitulation among investors lately.

Source: Wikimedia Commons. Courtesy Walters Art Museum.

A history of milestones
It was just over a year ago that the S&P 500 climbed above the 1,600 level for the first time, marking the end of a 13-year journey since the index hit 1,500. That was the longest time that it had taken the S&P to reach a new century-mark since 1985, with the great technology-stock bust and the financial crisis combining to hold the benchmark back.

Reaching that 1,600 milestone also required a major changing of the guard in terms of the stocks that contributed the most to the market's gains. During the 1990s, the S&P 500 hit new 100-point marks several times each year, and thousand-point moves for the Dow Jones Industrials became routine as well. Technology stocks were largely responsible for the moves in the S&P, and when they fell, the index went with them.

Similarly, during the housing boom, financial stocks gained supremacy over the market. Yet in the market meltdown following the financial crisis, those stocks were the hardest hit, and even now, many of the largest financial institutions haven't seen their share prices come even close to pre-crisis levels.

The new bull market
Since last May, though, the S&P has experienced three 100-point milestones. The index took less than three months before hitting 1,700 in early August, and then just less than four months to reach the 1,800 level in late November. In that context, the six-month delay to reach 1,900 might have made some bullish investors impatient. The Dow also took just over six months to climb from 15,000 to 16,000.

Of course, the key to remember is that these milestones become more meaningless as they get closer together on a percentage basis. Going from 1,800 to 1,900 on the S&P 500 represented only a rise of 5.6%. That's far less than a year's typical gain for the stock market historically.

Milestone levels are fun to observe, and given the amount of attention they get from ordinary investors, they can play a key psychological role in determining future market direction. But don't get wrapped up in the hype over a given round figure. Otherwise, the dangers of anchoring can lead you to make investing mistakes you could later regret.

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2970508, ~/Articles/ArticleHandler.aspx, 8/30/2015 2:03:08 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Dan Caplinger

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

Today's Market

updated 1 day ago Sponsored by:
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 1.21 0.06%
NASD 4,828.33 15.62 0.32%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/28/2015 4:55 PM
^DJI $16643.01 Down -11.76 -0.07%
^GSPC $1988.87 Up +1.21 +0.06%
S&P 500 INDEX CAPS Rating: No stars