Maybe The Dow Only Looks Dangerous

New yardsticks indicate that the bull still has room to run

Do the stratospheric heights of the U.S. stock market reflect a new era--or simply new levels of irrational exuberance? That was the question lobbed into the financial markets by Federal Reserve Chairman Alan Greenspan in his testimony before the Senate Banking Committee on Feb. 26. The markets interpreted his comments as debunking the view that the economy had entered a sustainable euphoric high, fueled by low inflation, strong corporate profits, and high productivity. The Dow industrials responded by plunging as much as 122 points before closing down 55 points, to 6,983, and the 30-year Treasury bond yield jumped from 6.66% to 6.78%.

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