Dow Soars to 11,000 on More-Traditional Wings

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If this is May, the Dow must be at 11,000. Indeed, barely a month after it closed above 10,000 on March 29, the Dow Jones industrial average rose more than 225 points to close at 11,014.69 on Monday. Should that have come as any surprise to market watchers? Not really, says TIME business senior editor Bill Saporito. The economic fundamentals are still in place. Moreover, the Dow hitting 11,000 is not as significant as hitting 10,000 or hitting 9,000 as it did about a year ago says Saporito. Each increment of 1,000 points at these levels represents less of a percentage increase.

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What is significant, however, is whose stocks appear to be leading the latest upward march. There is much discussion now over a return to the basics and the consequent return of the big cap cyclicals, says Saporito. Stocks such as GM and 3M did well on Monday, while tech stocks continued to skid. Investors seem to be finally discovering companies with real earnings, says Saporito, and the latest numbers provide more evidence that a rotation may be under way. Rotations of investor preferences, however, are often accompanied by painful dislocations. A basic question now is whether the pain will stay localized in the tech sector or reach into some other sectors as well.