IT has taken 88 months, or nearly three-quarters of the decade, but the American stock market is finally back to where it ended the last decade.
At least that is true if one measures stock performance in the traditional way, using dollars. As the chart accompanying this column indicates, the Standard & Poor%u2019s index of 500 stocks ended April a full 1.1 percent above its level of Dec. 31, 1999.
Unfortunately for those who owned American stocks during that period, the dollar itself has not been a star performer. As a store of value, the buck is having a bad decade.
The charts show how the S.& P. has performed against some other currencies, and against some alternative investments.
One chart shows the S.& P. looking good. The Japanese yen has been surprisingly weak in recent years, as Japan pursued an export-oriented strategy to try to get its economy moving again. Measured in yen, the S.& P. is up 18 percent during this decade.
Measured in euros, on the other hand, the S.& P. has lost a third of its value. Measured in British pounds, the decline is 22 percent.
The great traditional store of value is gold. It was largely ignored and scorned during much of the 1990s, but it has come alive since.
Imagine an S.& P. stock unit, consisting of fractional shares of each stock in the index, costing in dollars the value of the S.& P. index. At the end of 1999, that unit would have cost $1,469.25. At the end of April, it would have cost $1,482.37.
Buying that unit in 1999, when gold cost $289.60 an ounce, would have cost 5.1 ounces of gold. By April, with gold at $683.50, the price of the stock unit was down to 2.2 ounces of gold. That is a 68 percent fall for the stock index.
Similarly, that stock unit cost the equivalent of 718 bushels of corn back in 1999. Now you can buy the stock unit for only 414 bushels of corn. The unit cost the equivalent of 57 barrels of crude oil in 1999. Now you can buy the stock unit for less than 23 barrels of oil.
The final chart compares the value of stocks and houses. It uses the S.& P./Case-Shiller index of single-family home prices in 10 major metropolitan areas. That index is available only through February, so the chart shows stock values only through then.
Measured in house units, in February the stock index was worth 57 percent less than it was worth at the end of the 1990s. Put another way, a home worth $200,000 at the end of 1999 could have been bought for 136 of those S.& P. stock units. By this February, that home, assuming it rose with the house-price index, would have been worth $442,000, and would have cost 314 stock units.
Measured in almost anything but dollars, a investor in American stocks still has significant losses on stocks owned since the end of the last decade.
Stock prices rose moderately yesterday, carving out their fourth straight weekly gain amid a fresh round of corporate takeover news and employment figures that largely met expectations.
Reports that Microsoft renewed talks to acquire or invest in Yahoo helped buoy investor sentiment as did word that the Reuters Group received a preliminary takeover offer. There is speculation that Thomson, the provider of financial data, is the likely suitor for Reuters, the British news and information company.
Beyond the buyout news, which has figured prominently in shaping Wall Street%u2019s largely upbeat mood in recent months, economic data offered some nuggets for both bullish and bearish investors. The Labor Department said the nation%u2019s jobless rate rose to 4.5 percent in April as expected; in March, the rate had reached a five-year low of 4.4 percent.
%u201CThe economic data suggest that the economy is not tanking and inflation is not accelerating and that the Fed is not going to upset the apple cart,%u201D said Alan Levenson, chief economist at T. Rowe Price.
The Dow Jones industrial average rose 23.24 points, or 0.18 percent, to 13,264.62, its fourth straight record close. The Dow also reached a new intraday high of 13,284.53.
The Dow has set 19 record closes since the start of the year, and 41 since the beginning of October.
Broader indicators also moved higher yesterday. The Standard & Poor%u2019s 500-stock index advanced 3.23 points, or 0.21 percent, to 1,505.62. On Thursday, the S.& P. 500 moved above the 1,500 mark for the first time in nearly seven years, and it rose as high as 1,510.34 yesterday. The return to 1,500 puts the closing high of 1,527.46 %u2014 reached March 24, 2000 %u2014 within investors%u2019 sights.
The Nasdaq composite index rose 6.69 points, or 0.26 percent, to 2,572.15. While the Nasdaq has risen alongside the Dow and the S.&P. in recent sessions, it remains about halfway toward its March 2000 high.
Yesterday%u2019s advance ended another week of significant gains. The Dow was up 1.10 percent for the week, after crossing 13,200 for the first time Wednesday. It has gained 7.7 percent in the previous 25 sessions. The S.& P. 500 was up 0.77 percent for the week, while the Nasdaq rose 0.58 percent.
Bond investors were driven by government data that showed employers added the fewest new jobs in more than two years. While Wall Street does not want consumers to feel less secure in their jobs and perhaps curb their spending, a spike in wages amid a tight labor market could stir concerns about inflation.
The price of the 10-year Treasury note rose 8/32, to 99 28/32. The note%u2019s yield, which moves in the opposite direction from the price, fell to 4.64 percent from 4.67 percent on Thursday.
The dollar remained mixed against other major currencies yesterday, while gold prices rose.
Light crude oil fell $1.26, to $61.93 a barrel, on the New York Mercantile Exchange.
With acquisitive investors apparently circling media and information properties like Yahoo and Reuters, interest in such companies could be growing. Word of those possible deals comes three days after the News Corporation, run by Rupert Murdoch, offered to acquire Dow Jones & Company for $5 billion. Dow Jones rose 3 cents yesterday, to $55.80, as the likelihood of a deal remained unclear. News Corporation climbed 21 cents, to $21.87.
Yesterday%u2019s takeover news sent the targeted companies higher. Yahoo rose $2.80, or 9.9 percent, to $30.98, while Reuters rose $15.84, or 26.9 percent, to $74.76. Investors, who tend to distance themselves from companies doing the acquiring, sent Thomson down 28 cents, to $43.45, and Microsoft down 41 cents, to $30.56.
