Taking stock of 11K mark
By GRACE WYLER
The Dow Jones Industrial Average closed above 11,000 Monday for the first time since September 2008, but financial advisers in the area remained cautious about what this psychological milestone could mean for the local economy and investment.
“The individual may feel better psychologically,” said Eugene Emery, president of Emery Financial Group in Vienna. “But don’t be overly optimistic. Investors still need to pay attention to what is going on.”
The market probably will correct itself when company earnings are reported this week, Emery said.
“I am still very cautious,” Emery said. “The Dow had a nice run in the last 14 months, but the market never goes straight up.”
The market also likely will be affected by rising interest rates, Emery said. In the past, low interest rates have made investors willing to take some risks, but increased rates could change that, he said. Interest rates on home mortgages and credit cards already have risen this year.
In addition, high unemployment will prohibit economic recovery, many financial advisers said. Ohio had 11.8 percent unemployment in February.
But overall, the optimism on Wall Street is a good thing for the regional economy, many financial experts agreed.
“There are many things impacting the economy in Northeast Ohio, the most obvious being unemployment,” said Richard Kent, a professor of economics at Kent State University. “But this [11,000 closing] is a positive thing. It will have an impact on people’s wealth and people’s spending.”
The Dow’s hitting the 11,000 mark is a psychological marker that should put investors at ease, said Tony Lariccia, a stockbroker with Merrill Lynch in Canfield.
“I am feeling so much better than I did last year. ... There has been a marked improvement over the last year, and the economy is starting to pick up, albeit slowly.”
The market’s recovery these past months would not have happened without the Troubled Asset Relief Program and the federal stimulus bill, Lariccia said.
He praised President Barack Obama, Federal Reserve chairman Ben Bernanke and former Treasury Secretary Hank Paulson for their success in putting the economy on the road to recovery.
“The patient is off the gurney, walking, still groggy, but ready to begin training to start walking faster, and in a few years, he’ll be running,” Lariccia said. “I think America is on the verge of a nice resurgence because the patient didn’t die.”