Stock market milestone met with cautious optimism

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To great media fanfare, the Dow Jones Industrial Average hit an all-time high Tuesday, erasing an $11 trillion in losses from stock portfolios that began in late 2007.

"It signals that things are getting back to normal. Unemployment is too high, economic growth too sluggish, but stocks are anticipating improvement," Nicolas Colas, chief market strategist at the brokerage ConvergEx Group, told the Associated Press.

Since it bottomed at 6,547.05 on March 9, 2009, the Dow has risen 7,706.72 points, or 118 percent, closing Tuesday at 14,253.77.

Of course, unemployment was 4.7 percent at the time of the crash, compared with 7.9 percent today, a reminder that stock gains have proved no elixir for the economy.

Still, European stock markets rose today to their highest levels since the fall of 2007, helped by signs that the U.S. economy is improving and expectations of more pledges of support for growth from major central banks.

"Indexes are breaking above big resistance levels and this is creating room on the upside," Lionel Jardin, head of institutional sales at Assya Capital in Paris, is quoted in a report today from Reuters. "The sentiment is that central banks are going to remain very accommodative for a while, and at the same time companies are in really good shape, with strong cash flows."

But a scan of global reports on the news will find plenty of skepticism among all the ballyhoo. Specifically, a common concern is that the stock market's gains will be felt disproportionately by the wealthy.

Ric Edelman, a Fairfax, Va.-based independent financial adviser, said one of his clients called this week and asked him to send $62,500 because he had decided to buy a Porsche when only a few months ago the investor was reluctant to buy a used Corvette for $10,000.

"He now accepts the fact that he can afford it and fell in love with the car and decided to buy it," Edelman said in another report by Reuters. "There was no way he would have done that before."

That report includes an interview with Chris-Craft President and CEO Stephen Heese on the heels of the recent Miami International Boat Show. Heese said customers were spending more generously in ways not seen since before the financial crisis.

"In general, they want to live their life and they're tired of austerity," Heese said of his customers, adding that he expects sales growth in the order of 25 percent this year. "They're back to wanting to reward themselves."

Another tempered report notes that despite the Dow's record close, small businesses are still struggling.

Unlike the big corporations that have raked in huge profits and stoked the stock market, most small firms have yet to enjoy the fruits of the nearly 4-year-old recovery, according to a report by The Los Angeles Times.

Small businesses typically have been engines of job creation, but their lagging performance, along with a sharp drop in the rate of start-ups, has been a key reason that employment growth has remained mediocre.

Champ Land, a furniture maker in Troutman, N.C., who employs 26 workers, sees a “disconnect” between Wall Street and Main Street.

"Small-town America is not feeling it," Land said in the report.