The Milestone: The Dow Crosses 13,000

On Monday, the numbers that measure the American economy tell a story of a bull market that will not quit, and the story reached a new chapter last week. The Dow Jones Industrial Average closed above thirteen thousand points for the first time in its history, crossing the line on Wednesday, April 25. The milestone is the April 2007 story, and the story is the lesson: the markets are driven by the companies that carry the future, and in 2007 the future belonged to technology.

The Milestone is the subject of this article: how the index got to thirteen thousand, why the rally was powered by the technology stocks, what the cracks beneath the surface were saying, and what the milestone means for the companies and the investors who live by the numbers. The Dow closed the week above the line, and the crossing was the headline of the year so far. This is the story of the milestone, and the story is about the moment the second great bull market announced itself.

1. The Number

The number was the headline, and the headline was the history. The Dow Jones Industrial Average, the index of thirty companies that has measured American capitalism for more than a century, closed above thirteen thousand points for the first time ever on Wednesday, April 25. The close was a punctuation mark in a rally that had been running for years, and the punctuation was the news. The number was the milestone, and the milestone was the moment.

The number was also the roundness of the psychology. Thirteen thousand was not a level that the analysts had circled on their charts; it was a number that the headlines could write, a line that the news could celebrate, a round number that the public could understand. The crossing was the kind of event that fills the business pages and the dinner conversations, and the filling was the point. The number was the symbol, and the symbol was the story.

2. The Rally

The rally was the context, and the context was the climb. The Dow had fallen to about seventy two hundred points in October 2002, in the wreckage of the dot-com crash, and it had been climbing ever since. The climb had been steady, powered by corporate profits, by globalization, by the housing boom, and by the recovery of the technology industry. The index had more than doubled from the bottom, and the doubling was the bull market.

The rally had been tested in February, when a global selloff triggered by the Asian markets had knocked the Dow down more than four hundred points in a single day. The scare had passed, and the index had rebounded more than seven percent since that day, and the rebound was the proof of the strength. The rally was the story of the years, and the years were the making of the milestone. The rally was the climb, and the climb was the context.

3. The Leaders

The leaders of the rally were the technology stocks, and the leadership was the surprise. The crash of 2000 had been the technology crash, the bursting of the internet bubble, and the technology stocks had been the pariahs of the market for years. The recovery had been led by the companies that had survived and adapted: the search engine that had turned the internet into a money machine, the computer maker that had reinvented itself around the music player, the chipmakers and the software giants that had kept growing while the bubble deflated.

The leaders were the proof that the internet economy had grown up. The first boom had been built on promises, and the second boom was built on profits: the advertising revenue, the subscription revenue, the hardware revenue that the companies were actually collecting. The technology stocks were no longer the speculation; they were the earnings, and the earnings were the leadership. The leaders were the engine, and the engine was the milestone.

4. The Economy

The economy was the backdrop, and the backdrop was the confidence. The American economy had been growing for years, the unemployment was low, the inflation was tame, and the Federal Reserve had been holding interest rates after a long cycle of increases. The consumers were spending, the companies were hiring, and the profits were flowing. The economy looked solid, and the solidity was the fuel of the rally.

The confidence was also the mood of the moment. The investors believed that the good times could continue, that the earnings would keep growing, that the globalization would keep working, and the belief was the market. The economy was the foundation, and the foundation was the story. The economy was the backdrop of the milestone, and the backdrop was the belief.

5. The Cracks

The cracks were the warnings, and the warnings were visible to anyone who looked. The housing market was cooling after a historic boom, and the cooling was the first sign of the trouble. The subprime lenders, the companies that had made mortgages to the borrowers with the weakest credit, were starting to fail: New Century Financial, one of the largest, had filed for bankruptcy at the beginning of April. The cracks were in the foundation, and the foundation was the credit.

The cracks were the part of the story that the milestone could not fix. The Dow was measuring the optimism, and the cracks were measuring the risk, and the two were running side by side. The investors who noticed the cracks were the investors who asked the question: what happens when the credit stops flowing? The question was the warning, and the warning was the future. The cracks were the shadow, and the shadow was the story.

6. The Technology

The technology was the thread that tied the story together, and the thread was the theme of the era. The internet had stopped being a novelty and had become the economy: the searches, the auctions, the music, the maps, the social networks, the software that the world ran on. The companies of the internet were the companies of the future, and the future was being priced into the market every day. The technology was the growth, and the growth was the value.

The technology was also the cautionary tale, and the tale was the memory of the crash. The investors who had been burned in 2000 knew that the hype could outrun the reality, and the memory was the discipline. The technology stocks of 2007 were different, the analysts said: the profits were real, the business models were proven, the world was actually using the products. The technology was the story, and the story was the balance between the promise and the proof.

7. The Lesson

The lesson of the milestone was about the markets and the companies that carry them, and the lesson was the leadership. The Dow did not cross thirteen thousand because of the number; it crossed because of the companies, and the companies that led the way were the companies of the new economy. The lesson for the leaders of those companies was the same lesson the market was learning: the businesses that adapt to the future are the businesses that the future rewards.

The lesson was also about the fragility that hides behind the milestones. The index was at its record, and the record was the optimism, and the optimism was not the whole story. The leaders who watched only the index were missing the cracks, and the cracks were the risk. The lesson was the balance: celebrate the milestone, and watch the foundation. The lesson was the market, and the market was the teacher.

8. The Future

The future of the market would be written in the months ahead, and the future was the question. The Dow would keep climbing or it would stumble, the cracks would widen or they would heal, and the answers would come with the earnings and the headlines. The milestone was the moment, and the moment was the beginning of the next chapter. The future was the test, and the test was the market.

The future was also the lesson in the making. The thirteen thousand was the record, and the record would be broken, and the records were the nature of the bull markets. The companies of the technology economy were the story of the era, and the era was still young. The milestone is the April 2007 story, and the story is the lesson: the markets are driven by the companies that carry the future, and in 2007 the future belonged to technology. The Dow crossed the line, and the line was the beginning. The companies that led the market were the companies that understood the shift, and the understanding was the leadership. The leaders of the technology economy were the ones who had built for the internet, who had bet on the network, who had turned the clicks into the cash, and the bets were the rewards. The milestone was the scoreboard, and the scoreboard was the confirmation. The investors who watched the crossing knew that the records are made to be broken, and the breaking is the market's way. The thirteen thousand was the number of the week, and the number of the era was the technology that carried it.

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