Experts expect Dow to rise higher

By Don Shilling

The Dow has gained 53 percent since bottoming out in March.

The Dow Jones industrial average pushed over 10,000 for the first time in a year and appears poised to rise higher, experts said.

“The market still has a long way to run,” said Ken Mayland, president of ClearView Economics in suburban Cleveland.

Bill Stone, chief investment strategist with PNC, said no one can predict what stocks will do in the near term, but he’s expecting the markets to trend upward. Stock prices are still reasonable for long-term investors, he said.

Stocks have been rising steadily since hitting a 12-year low of 6,547 on March 9. On Wednesday, the Dow gained 144.80 to close at 10,015.86, a 53-percent gain since bottoming out in March.

The dramatic rise has calmed local investors, said David Bennett, senior vice president of the Butler Wick division of Stifel Nicolaus in Canfield. He’s no longer getting daily calls from panicked investors asking what they should do next.

“Most people who hung in there are very relieved they did and very happy the markets have bounced back,” he said.

Stone said, however, that many people pulled out of the market during late 2008 or early 2009 and have missed the large gains since then. Those people are now re- entering the market, which is partly responsible for pushing up stock values, he added.

Markets also have been encouraged by corporate earnings and retail sales reports that have been better than expected, experts said.

“We’re all anticipating the recovery,” Mayland said.

He added that some people are saying a pullback is likely because stocks have bounced back quickly. He doesn’t agree.

“We’re still climbing out of the hole,” he said.

The Dow would have to increase by 40 percent from today’s levels to reach its all-time high of 14,000 in October 2007.

One large problem remains in the economy — a lack of jobs.

Stone said it’s natural for consumers to question whether the economic recovery is real because many of them are out of work.

“Most people aren’t feeling good about the economy yet because employment hasn’t picked up yet,” he said.

Normally, however, consumer spending begins to rise, and then companies add jobs later, he said. Right now, the economy is at the stage where consumers are starting to spend again, he said.

Going forward, Stone said PNC sees opportunities in stocks that are cyclical. Industrial companies and consumer-product companies in particular have been hit hard during the recession but stand to do well in a worldwide recovery, he said.

Mayland said technology stocks have the potential to grow quickly because it is a dynamic industry. He added that health-care companies also could fare well in the future because investors have been staying away from them during the national health-care debate.

Mayland added that stocks should receive a boost when companies report their fourth-quarter results early year. Earnings reports were so bad a year ago that numbers will start to look good when they are compared to that period, he added.

shilling@vindy.com