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There was a standing ovation today on Wall Street. The Dow Jones Industrial Average moved into record-high territory, closing at 14,253. It's been five-and-a-half years since the Dow's last peak. And ever since then, the financial crisis, recession and high unemployment have kept the market in check until today.
As NPR's Yuki Noguchi reports, investors may be celebrating, but they haven't forgotten where they've been.
YUKI NOGUCHI, BYLINE: It was almost exactly four years ago, the Dow had bottomed at 6,547. Investors had lost so much faith that the markets were in virtual free fall. Since that time, the index has more than doubled. And today, UBS trader Art Cashin said just after the Dow surpassed the old record at the opening bell, the floor broke out in applause.
ART CASHIN: Well, there was kind of a mild cheer. There was no roar that you could hear for blocks. I think it was almost a kind of sigh of relief, but it is not overly euphoric.
NOGUCHI: Cashin says the last few years spooked investors who sought market alternatives like Treasury bonds and gold as safe havens for their money. He says he'll be interested to see whether the Dow's trading at new highs will bring some investors back or whether skittishness about slow growth and government spending cuts will keep them at bay.
CASHIN: It is an important psychological level to get back at least to where you were. You're not behind the eight ball anymore if you had bought five years ago. But that having been said, I'm not sure that that calls for popping a couple of champagne corks.
NOGUCHI: Jamie Farmer is managing director of the S&P Dow Jones Indices, which owns the index. He says though the Dow is not technically a measure of economic growth, in the popular imagination the Dow has come to signify something akin to that.
JAMIE FARMER: That Dow number has tremendous sort of referential qualities to it.
NOGUCHI: One reason the Dow is the biggest benchmark is that it is also the oldest. The original Dow started in 1896. Back then, it included a dozen stocks whose value is averaged, then published in what became The Wall Street Journal. Over the years, the composition of the Dow has broadened and changed, reflecting changes in the American economy.
Now, the Dow is made up of 30 blue-chip stocks - mostly not industrial - although the index still retains the word in its name. General Electric is the only original Dow stock to remain on the list today. And the last few years have seen plenty of turnover. Since its previous high in 2007, Farmer says the Dow has swapped out five stocks.
FARMER: We saw AIG, Citigroup, General Motors - they were taken out of the index since that 2007 high. And, you know, the reason for those is certainly as the result of, you know, the government takeover and the circumstances surrounding each of those individual companies.
NOGUCHI: Last year, Kraft Foods was also taken out and replaced by United Healthcare to reflect the growing importance of that sector in the economy. Farmer says it's important not to overplay the new record. It does not mean the economy has fully recovered from the crisis.
FARMER: This is one more step. It's one more step in our progression, one more step in the evolution of the recovery of the markets, but it's not the only one.
NOGUCHI: Corporate profits and the housing sector may be on the mend, he says, but there are plenty of issues, including high unemployment and budget battles that make the milestone worthy of only muted celebration. Yuki Noguchi, NPR News. Transcript provided by NPR, Copyright NPR.