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Dow Sets Record at 12,000

In the first 15 minutes of trading on October 18 the Dow Jones Industrial Average hit 12,049.51 before retreating and closing at 11,992,68, a gain of 0.4 percent. The rally in the index, which tracks the 30 largest companies in the United States, came on the heels of U.S. interest rates falling to their lowest levels since 1958 and reports of sustained earnings growth of 10 percent plus.

Investors were further encouraged by figures from the U.S. Department of Labor indicating that consumer price pressures have begun to level off and by better than anticipated third-quarter reports from companies like IBM.

This is the first time in the Dow's 110 year history that the index has reached the 12,000 mark. The index was created in May 1896 as a measure of performance for American industrial entities. In the 1990s the index, common referred to as simply "the Dow" fell 38 percent during the Internet boom. The Dow bottomed out at its lowest point in October 2002 and since that time has regained 65 percent.

Over the period of the last two weeks the Dow has set closing records seven times. While the benchmarks represent a psychological achievement for the stock market, analysts say it is one with little if any economic significance.

Although originally created to track industrial entities, the focus of the Dow has moved away from its industrial emphasis to financial service providers, technology companies, retailers, and manufacturing. It is the best known stock market index in the world.
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