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. Last Updated: 07/27/2016

Baby Boomer Dreams Fuel Dow Surge

NEW YORK -- In the end, it looked like the grandparent of all stock averages finally went through the 6,000-point barrier and stayed there because some big companies reported unexpectedly strong profits.

But the positive numbers from Chrysler and other corporations Monday were merely a quick pick-me-up for the final stretch run of the Dow Jones industrial average.

The real power behind the Dow's latest surge, experts say, came from the same rich brew of demographics and economics that has lifted the Dow past three other 1,000-point milestones during the past six years, treating July's terrifying 161-point plunge as though it were a mere speed bump.

The barometer of big U.S. companies rose 40.62 points Monday to 6,010.00, its first finish above 6,000. The surge appeared to ease somewhat early Tuesday, though the Dow was still 16 points higher, at 6,026, by mid-morning New York time.

Underlying the Dow's phenomenal staying power since October 1990 is an ocean of cash seeking investment outlets. Estimated at about $4 trillion by Steven Adler, manager of the ASM Fund in Tampa, Florida, it represents retirement savings, particularly those of baby boomers. By buying stocks, that group is now doing for the markets what it did for real estate when boomers began buying homes in the late 1970s and early 1980s.

Much of the baby boomers' nest egg is in mutual funds, which have poured $178 billion into the stock market during the first nine months of this year. Adler said nearly half the new money invested by mutual funds in the stock market this year has come from retirement plans. The plans have poured another $180 billion into individual stocks, he said, creating enormous upward pressure on stock prices, particularly because the supply of stock has been diminished by companies buying back their shares.

The 30 market-dominating stocks making up the Dow Jones industrial average have been favorites of investors since the July dip because their issues are less volatile than those of smaller and newer companies, Adler said.

The other key ingredient in the Dow's rise is what some experts call the nation's "Goldilocks" economy -- warm enough to have recovered from the recession of the early 1990s but not so hot that it has created inflationary pressure on wages and prices.