Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, February 24, 1995 TAG: 9502240103
SECTION: NATIONAL/INTERNATIONAL PAGE: A4 EDITION: METRO
SOURCE: ASSOCIATED PRESS
DATELINE: NEW YORK LENGTH: Medium
Probably not.
While average Americans who never owned a share in their lives might be tempted to yawn at Thursday's market milestone, economists say the optimism that brought it about could benefit everyone in the long run.
The Dow Jones industrial average - the best-known barometer of the stock market - overcame months of uncertainty over the economy and inflation to top 4,000 for the first time.
The average, compiled from the stocks of 30 of America's biggest businesses, hit the mark just before 10 a.m. and closed at 4,003.33, up 30.28 for the day.
Alvis Townley, a retired cotton farmer from Stanton, Texas, was unimpressed. ``I don't know what it controls or doesn't control,'' he said. ``For the average person it don't think it spells anything.''
Ken Robinson, account manager for a Phoenix freight company, said, ``I've always felt that even though the economy has been bad, the Dow Jones has still climbed. I don't think it is an indication.''
Economists said that while there's no magic in the number 4,000, the reasons behind the market's current rally are important.
Markets are rising because investors are confident that economic growth is continuing with low inflation. Interest rates are stabilizing, and a recession is unlikely.
These rising markets can make even small investors and noninvestors feel there's greater wealth around, economists say.
``It might make you go out and purchase an automobile or new furniture,'' said Randell Moore, executive editor of Blue Chip Economic Indicators, a newsletter published in Alexandria, Va.
Higher consumer spending ripples through the rest of the economy, helping keep jobs, wages and corporate profits rising.
Thursday's milestone was triggered by comments Federal Reserve Chairman Alan Greenspan made Wednesday that the central bank may be finished raising interest rates.
When those making financial decisions believe interest rates are stable, that's good for everyone, said Sandra Shaber, consumer economist with the Wefa Group, a consulting company in Bala Cynwyd, Pa.
``Our adjustable rate mortgages won't adjust up, our credit card rates won't go up, those of us trying to sell a house might find it easier to sell ... and it should mean a stronger job market.''
The Dow Jones Industrial Average is the oldest and most widely quoted of dozens of indexes of the U.S. stock market.
The Dow average is quoted in points, but it is based on dollar values of each day's closing prices for 30 blue-chip stocks.
by CNB