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Wednesday, 19 December, 2001, 22:22 GMT
Dow signals US recovery
New York Mayor Rudolph Giuliani, right, is applauded by New York Stock Exchange Chairman Richard Grasso
Mayor Rudolph Giuliani rings the NYSE opening bell
By BBC News Online's Jorn Madslien

On 31 August this year, America's Dow Jones stock market index closed below 10,000 for the first time in almost five months.

At the time, nobody knew that terror was heading for the World Trade Centre.

Neither did anybody know that in a matter of days, the main news from Wall Street would no longer be the movements of an index.

On 10 September, the day before the attacks, traders had despaired when the Dow closed at 9,605.

It would take almost two months before it recovered to such a high: When trading resumed following the attacks, the Dow responded by taking a 7% dive, the sharpest one-day fall in its history.

When, on 9 November the index of the shares in America's leading corporations closed at 9,608, it was seen as a small victory.

Market indication

The Dow is widely seen as a thermometer; reading it gives an indication of whether corporate America is healthy, or whether it is sick to the bone.

When the US officially entered recession in March, the stock market had suffered for months.

The Dow index had been a clear indication of what was happening in the US economy, ending its first quarter of 2001 at 9,870, 9% below where it had started the year.

Seen in this perspective, Wednesday's close at 10,070 is therefore more than just a number.

In January this year, the Dow started trading around 10,600.

Which means the index stands a fair chance of ending the year roughly where it started out.

Sign of a recovery?

Sure, it is not the way growth hungry investors would have liked it to be, but it is a lot better to stand still than to fall.

And if we are to trust those who say stock market performance is a clear indication of where the real economy is heading, there could be light at the end of the tunnel.

For if the stock markets have almost recovered, there is a chance that the economy will do so to.

After all, a major factor pushing the Dow above 10,000 on Wednesday was the release of influential economic data by the Conference Board which suggested "the recession could be losing steam".

For New York's mayor Rudolp Giuliani, who rang the opening bell at the stock exchange on Wednesday, this would come as a welcome Christmas present.


Terror's impact

Signs of a slowdown

Rate cuts

Analysis

Key players

FULL SPECIAL REPORT
See also:

19 Dec 01 | Business
US trade soars to recovery
09 Nov 01 | Business
Dow regains pre-terror levels
02 Oct 01 | Business
Shares gloom ahead of fourth quarter
01 Apr 01 | Business
Shares' disastrous quarter
02 Jan 01 | Business
A gloomy year for stock markets
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