Dow breaks through all-time closing high

(USA TODAY) -- The Dow is back. All the way back. At the opening bell Tuesday, the benchmark index sailed past its all-time closing high of 14,164.53 set Oct. 9, 2007.

The Dow Jones industrial average has now erased the 54% loss it suffered in the brutal 2007-2009 bear market. In the first hour of trading, the Dow was up 0.8%, more than 110 points. Only one of the Dow's 30 stocks, United Healthcare, was trading lower.

The broader Standard & Poor's 500 stock index was up 0.8%, above 1,535 and less than 30 points from its record closing high of 1,565.15 set on the same day as the Dow's record in 2007.

The tech-heavy Nasdaq composite index rose 0.9% in early trading at 3,209, but it is still well below its all-time high hit during the dot-com bubble in 2000. The Nasdaq's record closing high of 5,048.62 was set March 10, 2000. Google shares were trading at a record high of $838.02, up 2%, while Apple shares, up 1.1%, were struggling to rebound from a 52-week close Monday.

What's important is whether the Dow can hang onto the gains throughout the trading session in the face of investor fears about the impact of $85 billion in federal budget spending cuts that kicked in Friday. Federal Reserve Chief Ben Bernanke has said it could cut at least 0.5% percentage point off economic growth in 2013.

But Tuesday morning's new high could elevate the mood of investors, many of whom are still reeling from the steep drop triggered in 2008 as the housing market bubble burst and the value of hundreds of billions of dollars in mortgage-backed securities plummeted.

The Dow's new high is "important from a psychological standpoint," says Andres Garcia-Amaya, global market strategist for JP Morgan Funds.

And this bull market, four years old this week, may have more room to run, says Garcia-Amaya, despite lingering worries about the nation's fiscal troubles, Europe's debt and political woes and other lurking risks.

Working in investors' favor is that the broad stock market is basically back to where it was in 2000, while corporate earnings have doubled since then, making stocks a good value, says Garcia-Amaya.

More important, he says, is that the mood of the market is far from overly exuberant, as it was prior to the tech-stock crash in 2000 and at the top in 2007, when real estate and stocks were flying high.

"We don't think we are seeing exuberance in the current market," says Garcia-Amaya. "The entire rally has been hated. And that makes us feel more comfortable."

Not every investor will be celebrating the milestone, says Joe Quinlan, chief market strategist at U.S. Trust.

"It depends on whether you have been in or out of the stock market," Quinlan says, noting that many investors went to the sidelines in early 2009 and haven't gotten back in. They have missed a rally in which the Dow has gained more than 115%.

Quinlan says he believes the Dow's run has legs: "Stocks are under-owned by both retail and institutional investors," says Quinlan, who says there is a lot of cash sitting on the sidelines that could come back into stocks if the global economy keeps chugging along and well-run corporations in the U.S. keep pumping out profits.

Others aren't so sure. Beware of new highs, cautions Walt Zimmermann, a technical analyst at United-ICAP. He sees a bearish chart pattern that points to a market top.

"The attitude investors should have is that they are walking on thin ice," says Zimmermann. "The ice is softening and they should be listening for cracks."

But around the world, investors were buying Tuesday. Markets across Europe rallied Tuesday with Germany's DAX 30 index up 1.9%, France's CAC-40 index up 1.6%, and Britain's FTSE 100 index rising more than 1.1%. y and France up more than 1.5% and Britain's FTSE 100 index up 0.9%.

Asian stock markets advanced Tuesday as investors registered approval for China's spending priorities announced at its annual congress.

Markets in Hong Kong and mainland China drew encouragement from a speech by outgoing Premier Wen Jiabao and presentation of the country's budget at the opening of the annual National People's Congress, a largely ceremonial legislature.

Hong Kong's Hang Seng rose 0.1% to 22,564.55. The mainland's Shanghai Composite index gained 2.3% to 2,326.31. Japan's Nikkei 225 index tacked on 0.3% to finish at 11,683.45.

Benchmark oil for April delivery was up 29 cents to $90.41 per barrel in electronic trading on the New York Mercantile Exchange. Oil prices traded below $90 a barrel most of Monday after two months of steep gains.