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The United States stock market hit a new high this year, as the Dow Jones Industrial Average passed the 9,000 mark in April. Since 1996 the Dow, an index measuring the overall level of the market, has increased by more than 50 percent.
Explanations for the stock market boom vary. According to Lawrence Lindsey, a former governor of the Federal Reserve Board, the Federal Reserve deserves much of the credit for high stock market prices because it has kept inflation from rising. Other observers credit low interest rates, which they attribute to the reduction in the budget deficit; the low rate of inflation; and the high level of optimism about the future.
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The rising market has attracted many new investors, and more than half of all Americans now own shares in the stock market. "Everybody is in the market: my barber, the checkers at the supermarket, the plumber's helper, the house painter, the sales clerks at the hardware store," commented one investor.
- How has the stock market performed so far this year?Answer
- What may account for the market's performance?Answer
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