Mr. Dow's Wild Ride Returns Index to Where 2010 Began

The Dow Jones Industrial Average is within an eyelash, a tenth of a percentage point or so, of being back to where it began the 2010 trading year, closing July 23 at 10,424.62. This followed a furious rally from early March to the end of April that took the index to just over 11,205, before fears about a double-dip recession, intractable unemployment, a housing market that won't stop collapsing, economic trouble in Europe, and the U.S. deficit pushed it back down again to just under 9,700 on July 2. The market has trade up sharply since then.

Tech has been the major component of the comeback. Investors have warmed to the idea that corporate IT spending has rebounded. Among the Dow tech stocks, HP (HPQ) is up 11% since the beginning of the year. IBM (IBM) is up almost 10%. Intel (INTC) is up 8%, mostly on the back of a surge in server and PC sales.

But it's surely not an all tech rally: One of the most extraordinary Dow components is McDonald's (MCD), which has risen 13%. Its recent earnings show that the world's largest fast-food chain continues to reinvent itself with new lines of products, sold at prices that a large number of the world's eaters can afford. Its odd twin in success is heavy-equipment company Caterpillar (CAT) which has risen 20% year-to-date thanks to strong earnings, careful cost controls, and a rebound in infrastructure building around the world.

It's no surprise that shares of oil and raw material suppliers have declined as the price of crude oil and metals have sold down. Exxon Mobil (XOM) is off 12%, while Alcoa (AA) is down over 30%.

If unemployment stays high, the deficit grows faster than expected, and U.S. GDP drops below 2% in the third quarter, the odds that the Dow will rally for the balance of the year are low.