The road to this landmark has not been smooth. The market has been more volatile this year, in terms of daily swings, than at any time since before the 1987 crash. It surged ahead in January, gave up those gains in February, and this month is moving upward again. I think the level of volatility implies that investors are sensitive to the fact that the markets are a little high. In this environment, when there is any bad news, the markets take a hit.
Day traders are interested only in short-term investments in stocks that are very volatile.
A Dow stock does not typically move a great distance in a single day, unlike a small technology stock, for example. Internet stocks are too new to be components of the Dow and so their recent popularity is not reflected in the Dow's performance. The valuations reflect investor optimism more than robust earnings. The Dow stocks appear expensive by historic reference points used to measure stock valuations. But, as Federal Reserve Board Chairman Alan Greenspan pointed out two weeks ago, investors are showing very high expectations for earnings growth and are not demanding much of a premium for the risk they are taking.