When the DOW Industrial Market Index first closed over the 10,000 milestone in 1999, brokers on the trading floor celebrated with confetti, baseball caps and party hats.  The significance of the event was not lost on brokers who remembered the day in 1973 when the industrial average closed above the 1,000 mark for a brief period during a sustained bear market.  With the DOW inching toward 10,000 again (reaching the mark briefly in mid-October 2009), many individuals are wondering—what does the milestone mean in today’s market?

While the DOW Industrial is still an important indicator of how the market is doing, some analysts are quick to point out that the average, which tracks only thirty stocks—some of which are relative newcomers—has a largely psychological gravity, particularly the 10,000 mark.  After all, in 2007 the average hit over 14,000 points; a year later, the market was down to its lowest level in well over a decade.  Since the market crash of ’08-’09, the Dow Jones Industrial Average has flirted with the record highs first celebrated in 1999 and, in 2008, the largest one-day profit losses since the year prior.  Market volatility over the past year has demonstrated the weaknesses of the DOW.

Such recent gains don’t necessarily undermine the DJIA’s ability to predict how the market will far in the future.  For example, analysts for Brown Brothers Harriman explained in September 2009 that the upward trend signifies the optimism investors and consumers are experiencing as the stocks begin to soar upward: the “wall of resistance” that has existed around the market at large for more than a year seems to have lifted as investors become more and more confident in economic recovery.  Overcoming the massive hurdle of further regression (particularly the closing low of just above 6,500 in March of 2009) is a giant boost to the market, and one that should not be passed by idly.  Any indication that a bull market is beginning to form will cause investors take heart, resulting in a better economy for the broker, investor, and ultimately the consumer.

However, several factors play into the idea that the DOW might not be as powerful an indicator of market trends as it might once have been.  Weakening real estate markets, bad loans run amok, and a mounting national debt accrued in part by the oft-lampooned stimulus of the Obama Administration, have yet to be conclusively resolved.  Moreover, weak earnings from most major companies will cast a damper on the outlook for the future when data is released in mid-October.  Losses, even on the advent of the 10,000 mark, from historically-strong companies such as Wal-Mart, Verizon, and AT&T demonstrate that a bullish market at the moment does not translate into gains for many of America’s market cornerstones.  And of course, the much broader S&P, which tracks $68 billion instead of the DOW’s $8, doesn’t look nearly as robust, leading many to the conclusion that the psychological advantage posed by the DOW’s returning to a decade-old milestone is simply that: the “mind-forg’d manacle,” as poet William Blake once wrote, of an economy still tethered to 100-year old market tradition.

Is there, indeed, cause for celebration?  Of course there is.  As the 100, 1000, and 10,000 marks have all been historical stumbling blocks, fluctuating between alarming up-and-down shifts, the prospect of reaching beyond the 10,000 milestone—and perhaps continuing to rocket past the once inconceivable 14,000 average of more than a year ago—is attractive to the American market.  However, the deeply divided opinions regarding whether or not a recovery is actually occurring, or if it is, whether it will continue, will remain just as divided until the economy makes a more decisive (or perhaps, more permanent) move in one direction or the other.