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Wall Street is back and bigger than ever.
Traders high-fived as the Dow Jones industrial average achieved an all-time high yesterday — an almost unimaginable feat just five years ago, when the nation was mired in its deepest slump since the Great Depression.
After a roaring start, the blue-chip index closed up 0.9 percent to 14,253.77 — blowing past its previous record of 14,164.53 set in 2007 before the housing collapse and credit crisis tanked the stock markets.
The Standard and Poor’s 500 index also surged yesterday, rising 0.96 percent, or 14.59 points, to close at 1,539.79.
Soaring stocks have spurred hopes that the worst of the downturn may finally have become a thing of the past.
“Stronger earnings and much lower interest rates mean this is a much cheaper market than it was five years ago,” said David Kelly, chief market strategist for JPMorgan’s funds group.
The blue-chip index ended up 125.95 points after rising as high as 14,286.37 to surpass the previous record set Oct. 9, 2007.
Just a year later, investment bank Lehman Brothers would fold and, within six months, the Dow would plummet 54 percent to rock-bottom levels of 6,547.05 in March 2009.
While dark economic clouds still loom, including stubbornly high unemployment, corporations are flush with cash and are earning 15 percent more on average than they were before the financial meltdown, experts said.
Moreover, historically low interest rates mean that investors have little choice but to turn to stocks for decent returns.
“As an investor, if you think the economy is getting better, I don’t see how you could not invest in stocks, with bond prices where they are,” said Joseph Lavorgna, an economist with Deutsche Bank.
Also boosting confidence yesterday was China’s pledge to continue to support the country’s economic expansion. The government announced plans to increase fiscal spending by 10 percent and maintain a growth target for the year of 7.5 percent.
While the Wall Street bull is raging, plenty of seasoned veterans still doubt its strength, especially with budget battles in Washington and Europe’s lingering debt issues.
“I’m kind of surprised that markets keep going up,” said Manish Bangard, US equity strategist with UBS. “Investors seem to be ignoring sequestration and other macro events that haven’t dissipated.
“Given macro risks, I think markets got ahead of themselves. It could be a very volatile and wild ride.”
Shares of Google also hit a new intraday high yesterday. The stock closed up 2.08 percent to $838.60. Apple rebounded after hitting a 52-week low the day before, rising 2.6 percent to $431.14.
Not all stocks benefited, however. JCPenney shed 10.4 percent to close at $15.05 after Vornado Realty Trust said it dumped a large portion of its shares in the struggling retailer at a loss.