So the Dow hit a record; now where do we go?

Sunday - 3/17/2013, 8:24pm EDT

CHRISTINA REXRODE
Associated Press

NEW YORK (AP) -- So the Dow Jones industrial average broke a record this month. Now what?

It's impossible to predict how the Dow, that popular barometer of the stock market, will zig and zag from here. The only thing certain about the market is that there will be more peaks and valleys ahead, and that's about as specific as a fortune cookie.

But we can look at the previous times the Dow burst through a record, and measure how long it kept rising and why it eventually stopped -- ending the bull market. And what does history show?

After it broke one record, the Dow kept rising for nearly nine years. After another, it rose for seven years, and after another, for five. But after one, it topped out just two months later. In most cases, the bull run ended because inflation and interest rates were rising and investors feared a recession loomed. Those conditions don't exist today.

The Dow closed at 14,253.77 on March 5, beating its October 2007 record by 89 points. In the eight trading days since, it has risen on seven of them, setting a record each time. Its only down day was Friday.

So far, its highest close ever was Thursday, when it reached 14,539.14.

Here are previous long-held Dow records since World War II, when they were broken and what happened after. Jamie Farmer, a managing director at S&P Dow Jones Indices, helped with the calculations.

--RECORD DAY: Nov. 23, 1954. The Dow breaks the record that had stood since September 1929, closing at 382.74.

--RISE CONTINUES: It keeps rising for seven years, gains 92 percent and peaks at 734.91 on Dec. 13, 1961.

The Dow's record-breaking day in 1954 was a long time coming. It had been 25 years since the index hit 381.17 on Sept. 3, 1929, when the Roaring Twenties were still roaring. The Dow plunged in the Great Depression and bottomed at 41.22 in 1932 -- down an astonishing 89 percent from the 1929 peak. For the rest of the 1930s, it never came close to regaining all its losses. The highest it reached was 194.40 in 1937 -- still down nearly 50 percent from the 1929 high.

During World War II, from 1941 to 1945, the Dow rose to 174. Peacetime spurred it even higher, helped by a baby boom and a desire to spend after years of rationing. The U.S. became the world's powerhouse economy because the economies of Europe and Japan were wrecked by the war.

After a late '40s bear, the Dow went on a bull market run that lasted from 1949 to 1961, its longest ever.

On Dec. 13, 1961, the Dow finally peaked at 734.91, and then it languished. In the spring of 1962, President John F. Kennedy's fight with Big Steel over the industry's price increases made businesses nervous about how they'd fare under his tenure. Their apprehension deepened when Kennedy famously said, "My father always told me that all businessmen were sons of bitches, but I never believed it til now!" (He said later that he didn't mean to refer to the entire business community.)

By June 26, 1962, the index had fallen 27 percent from the previous year's record, to 535.76.

--RECORD BREAKER: Sept. 5, 1963. The Dow breaks the record that had stood since 1961, closing at 737.98.

--RISE CONTINUES: It keeps rising for almost two and a half years, gains 35 percent and peaks at 995.15 on Feb. 9, 1966.

The Dow bounced back from its so-called "Kennedy Crash," and on Sept. 5, 1963, it set a new all-time high, up 38 percent from its low in June 1962. President Kennedy had taken pains to reach out to businesses and promised lower taxes. The standoff with the Soviet Union in October 1962, a fight that came to be known as the Cuban Missile Crisis, ended without war, which gave the market license to rise again.

On February 9, 1966, the Dow hit 995.15 and stopped rising. Investors went from planning Dow 1,000 celebrations to worrying that inflation was about to creep up and that the Vietnam War would drag on.

After the February 1966 record, the Dow fell 37 percent over about four years. It bottomed out on May 26, 1970, in the middle of a recession, at 631.16.

--RECORD BREAKER: Nov. 10, 1972. The Dow breaks the record that had stood since 1966, closing at 995.26.

--RISE CONTINUES: It keeps rising for two months, gains 6 percent and peaks at 1,051.70 on Jan. 11, 1973.