Dow Industrials Cross 25000 for First Time

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Dow Industrials Cross 25000 for First Time


Dow Industrials Cross 25000 for First Time – WSJ

S&P 500 also reaches new landmark, logging greatest bull run in postwar era

The Dow Jones Industrial Average jumped past 25000 for the first time Thursday, the index’s fastest run to a fresh 1,000-point milestone in history.

The S&P 500’s long-running rally also reached a new landmark Thursday, becoming the greatest bull market in the postwar era. The broad index has more than quadrupled since the bull market began in March 2009, surpassing the tech-fueled rally of the 1990s, according to the research firm Leuthold Group, which excluded dividends from its calculations. The Dow has risen 283% over that same period, according to the WSJ Market Data Group.

Thursday’s moves marked the latest feats for a rally that has repeatedly wrong-footed skeptics and sent stock indexes around the world to multiyear highs. The Dow industrials hit five thousand-point milestones last year, the most such records in its 120 years.

Faster economic growth around the globe and improving sentiment from consumers and businesses have helped power this rally in recent weeks. Economic data in the first days of the new year continued to suggest steady expansion in the U.S., China and Europe.

“The turn of the calendar year doesn’t change the dynamics of economic growth and earnings growth,” said

Kate Warne,

investment strategist at retail brokerage Edward Jones. “We shouldn’t be surprised that markets continue to move higher because fundamentals continue to be positive and investor optimism is actually improving rather than investors becoming more cautious.”

The Dow industrials, which heavily weights industrial giants such as Boeing and Caterpillar, gained 152.45 points, or 0.6%, to 25075.13. It took the Dow industrials 23 trading days to reach 25000 from 24000, ahead of the 24-day spans that carried the index to 11000 in 1999 and 21000 in March.

The S&P 500 climbed 10.93 points, or 0.4%, to 2723.99, while the Nasdaq Composite added 12.38 points, or 0.2%, to 7077.91. Each major index closed at fresh records.

Shares of financial firms led markets higher Thursday as a strong private jobs report raised investors’ expectations for further interest-rate increases.

Businesses across the country added 250,000 workers in December, according to payroll processor Automatic Data Processing Inc. and forecasting firm Moody’s Analytics, topping economists’ expectations. The U.S. Bureau of Labor Statistics will release its monthly jobs report on Friday.

Goldman Sachs Group gained $3.54, or 1.4%, to $256.83, contributing about 24 points to the Dow’s gain. American Express Co. added 1.65, or 1.7%, to 100.85, while JPMorgan Chase & Co. rose 1.54, or 1.4%, to 109.04.

“Financials had been out of favor for some time, but they’ve been benefiting from this [tax] stimulus,” said Jeff Zipper, a portfolio manager and managing director at U.S. Bank’s Private Client Reserve.

20000

3

15000

        The Dow crossed this milestone during the heart of the internet boom, with unemployment in the midst of a long fall toward its lowest level in decades.

2

2

10000

1

5000

0

        Four years after the recession ended, the Dow climbed above 15000, as historically low interest rates boosted demand for stocks and the price of oil hovered near $100 a barrel.

3

’10

2000

Nov. 1995

Unemployment

Nymex Crude Oil

a barrel

$150

%

10

8

100

        The blue-chip index raced to 20000 while the dollar strengthened in late 2016 and early 2017, buoyed by bets that the newly elected administration would pursue policies such as tax cuts, regulatory rollbacks and infrastructure spending.

4

6

4

50

2

0

0

2000

’10

1995

’10

2000

1995

10-year yield

Gold

8

%

a troy ounce

$2,000

        The Dow climbed 5000 points in under 12 months to its latest milestone, while the yield on the 10-year Treasury held steady even as the Federal Reserve raised short-term interest rates and the unemployment rate hit multiyear lows.

5

6

1,500

4

1,000

500

2

0

0

1995

2000

’10

1995

2000

’10

Dow Jones Industrial Average

        Following a year of rapid interest-rate increases by the Federal Reserve, excitement over dot-com companies helped push stock indexes to new highs by the end of 1995.

1

5

25000

4

20000

3

        The Dow crossed this milestone during the heart of the internet boom, with unemployment in the midst of a long fall toward its lowest level in decades.

2

15000

2

10000

1

        Four years after the recession ended, the Dow climbed above 15000, as historically low interest rates boosted demand for stocks and the price of oil hovered near $100 a barrel.

3

5000

0

Nov. 1995

’10

2000

        The blue-chip index raced to 20000 while the dollar strengthened in late 2016 and early 2017, buoyed by bets that the newly elected administration would pursue policies such as tax cuts, regulatory rollbacks and infrastructure spending.

4

Unemployment

Nymex Crude Oil

$150

a barrel

%

10

8

100

6

4

50

2

0

0

1995

2000

’10

’10

1995

2000

        The Dow climbed 5000 points in under 12 months to its latest milestone, while the yield on the 10-year Treasury held steady even as the Federal Reserve raised short-term interest rates and the unemployment rate hit multiyear lows.

5

10-year yield

Gold

%

8

$2,000

a troy ounce

6

1,500

4

1,000

2

500

0

0

’10

2000

1995

2000

1995

’10

Dow Jones Industrial Average

        Following a year of rapid interest-rate increases by the Federal Reserve, excitement over dot-com companies helped push stock indexes to new highs by the end of 1995.

1

5

25000

4

20000

3

15000

        The Dow crossed this milestone during the heart of the internet boom, with unemployment in the midst of a long fall toward its lowest level in decades.

2

2

10000

1

5000

0

        Four years after the recession ended, the Dow climbed above 15000, as historically low interest rates boosted demand for stocks and the price of oil hovered near $100 a barrel.

3

2000

’10

Nov. 1995

Nymex Crude Oil

Unemployment

$150

a barrel

%

10

8

100

6

        The blue-chip index raced to 20000 while the dollar strengthened in late 2016 and early 2017, buoyed by bets that the newly elected administration would pursue policies such as tax cuts, regulatory rollbacks and infrastructure spending.

4

4

50

2

0

0

1995

’10

2000

’10

1995

2000

10-year yield

Gold

a troy ounce

$2,000

8

%

        The Dow climbed 5000 points in under 12 months to its latest milestone, while the yield on the 10-year Treasury held steady even as the Federal Reserve raised short-term interest rates and the unemployment rate hit multiyear lows.

5

6

1,500

4

1,000

2

500

0

0

2000

’10

1995

’10

2000

1995

Dow Jones Industrial Average

5

25000

4

20000

3

15000

2

10000

1

5000

0

2000

’10

Nov. 1995

Nymex Crude Oil

Unemployment

$150

a barrel

10

%

8

100

6

4

50

2

0

0

1995

’10

2000

2000

1995

’10

10-year yield

Gold

8

%

$2,000

a troy ounce

6

1,500

4

1,000

2

500

0

0

2000

’10

1995

’10

2000

1995

        Following a year of rapid interest-rate increases by the Federal Reserve, excitement over dot-com companies helped push stock indexes to new highs by the end of 1995.

1

        The Dow crossed this milestone during the heart of the internet boom, with unemployment in the midst of a long fall toward its lowest level in decades.

2

        Four years after the recession ended, the Dow climbed above 15000, as historically low interest rates boosted demand for stocks and the price of oil hovered near $100 a barrel.

3

        The blue-chip index raced to 20000 while the dollar strengthened in late 2016 and early 2017, buoyed by bets that the newly elected administration would pursue policies such as tax cuts, regulatory rollbacks and infrastructure spending.

4

        The Dow climbed 5000 points in under 12 months to its latest milestone, while the yield on the 10-year Treasury held steady even as the Federal Reserve raised short-term interest rates and the unemployment rate hit multiyear lows.

5

He added the firm has been increasing clients’ exposure to financial stocks as Republicans passed their tax overhaul, and on expectations that the gap between the two-year and 10-year Treasury note yields will increase after nearing its narrowest level in a decade last month. A wider gap between short- and long-term interest rates tends to boost lenders’ profits.

The Dow industrials rose 25% in 2017 as investors bet on solid corporate earnings and a pickup in global economic growth. Analysts and investors say sectors like financials and energy are poised to play a bigger role in pushing markets higher. Recently, the price of oil has risen above $60 a barrel, providing a boost to many of the oil-and-gas companies that languished much of last year.

Shares of Chevron surged in the second half of 2017. The oil producer’s stock has risen 21% in the last six months, roughly double its gain for all of last year. Exxon Mobil has climbed nearly 6% over that same period despite finishing last year lower.

“The risk sentiment is absolutely roaring right now,” said

Richard Benson,

co-head of portfolio investments at Millennium Global Investments. “As an investor, it’s easy to develop a fear of missing out.”

While some investors are excited by the swift pace at which the Dow climbed the latest 1,000 points, many analysts are quick to note that as the blue-chip index rises, the percentage move required to leap to a new milestone becomes significantly easier. For instance, the move to 11000 from 10000 required a gain of 10%, while the rise from to 25000 from 24000 needed a 4.2% increase.

The market’s steady climb continues to worry some money managers who question whether stock valuations have become stretched, even as earnings for S&P 500 companies this year are projected to grow at their best rate in seven years. A recent jump in investor exuberance has also put some analysts and investors on edge.

“If investor optimism gets excessive, and I think it’s close to being excessive, I wouldn’t be surprised to see” a pullback in the market, said

Bruce Bittles,

chief investment strategist at Baird.

Write to Corrie Driebusch at corrie.driebusch@wsj.com, Michael Wursthorn at Michael.Wursthorn@wsj.com and Georgi Kantchev at georgi.kantchev@wsj.com




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