The Dow Jones Industrial Average is an index that reflects how the shares of 30 selected companies have traded during a market session. When the average price rises the DJIA rises, and when the average price falls the DJIA falls.
So your real question is why is the average price rising when the economy is performing as poorly as it is? My theory is that it is mainly a matter of supply and demand. Every day there is new money to be invested in our securities markets from retirement plan contributions, and some of that money must be invested in equities. The supply of equities, total numbers of shares of new companies and existing companies, is not increasing at the same rate as the demand for equities. Thus the prices of existing equities are increasing to levels that exceed historic price to earnings ratios.
This post was edited on 2/2 at 11:42 am