Stocks keep soaring to new heights

Is ‘Trump effect’ behind rally?

Street is melting — up!

Market meltdowns get more attention, but the U.S. stock market is ripping higher and breaking records.

U.S. stocks rose for the sixth day in a row Friday as major indexes continued to set records. The biggest gains went to companies that have been mostly left out of the post-election rally, including health care companies and makers of household goods.

Stocks were solidly higher throughout the day and jumped an hour before the close of trading. Coca-Cola and Pfizer both gained 2.5%. Investors have mostly avoided consumer goods makers and health companies in recent weeks. Instead they’ve bought banks and machinery companies, which could benefit more from a faster-growing economy.

“What we’re seeing today is investors who are fearful they’ll be left behind,” said Kate Warne, investment strategist for Edward Jones. “So it may not be surprising that they’re buying less aggressive stocks and sectors.”

The Dow Jones industrial average climbed 142.04 points, or 0.7%, to 19,756.85. The Standard & Poor’s 500 index rose 13.34 points, or 0.6%, to 2,259.53. The Nasdaq composite gained 27.14 points, or 0.5%, to 5,444.50. The Russell 2000 index of smaller-

company stocks edged up 1.71 points, or 0.1%, to 1,388.07.

The S&P 500’s six-day winning streak is its longest in 21⁄2 years.

The Dow is up more than 1,400 points since election day and is up 12.6% this year. The Dow appears destined to break the 20,000 mark for the first time in the near future.

Call it a moonshot. Or Wall Street euphoria. Or a “Trump rally,” as investors are pricing in better earnings and economic growth, thanks to the president-elect’s promises to cut corporate taxes, reduce business red tape and spend heavily on infrastructure.

Whatever you call it, the market melt-up is real.

Here are five theories that explain why stocks are in such an unprecedented, historical rally mode.

Money managers playing catch-up. 2016 is almost over and stock fund managers that are trailing the benchmarks they’re measured against have to buy stocks or get left further behind in the performance race, said Brad McMillan, chief investment officer at Commonwealth Financial Network.

Bond sell-off eases. The sell-off in U.S. government bonds, which pushed the yield on the 10-year Treasury note up from a low of 1.32% in July to nearly 2.5% at the start of December, has stalled. Thursday, the 10year note was trading at 2.4%, reducing fears that a massive spike in borrowing costs would put pressure on a stock market most market pros say is overvalued, said Bruce Bittles, chief investment strategist at Milwaukeebased Robert W. Baird & Co. Inc.

Cash flooding back to stocks. “Tons of cash on the sidelines is coming off,” said Gary Kaltbaum, president of Kaltbaum Capital Management.

Money that had been invested in bonds is also moving back to stocks in search of bigger returns, added Ann Milletti, senior portfolio manager at Wells Capital Management.

Cash exiting bond funds in the most recent five-week period hit a 31⁄2 year high, Bank of America said, while stock funds enjoyed their biggest four-week inflows in two years.

“Trump effect.” The market is still driven by momentum inspired by Trump’s business-friendly policies, said David Kelly, chief global strategist at J.P. Morgan Funds. Investors are pricing in better corporate earnings based on Trump’s promise to lower the federal corporate tax rate to 15% or 20%, from 35%, he says.

A trend signal says “buy.” The Dow Jones Transportation Average, which is filled with stocks like package delivery companies United Parcel Service and FedEx as well as railroads and airlines, hit fresh alltime highs for the first time in two years.

The new peak triggered a bull signal, Bittles said. The “Dow Theory” says the market uptrend is “confirmed” when stocks in the Dow that make stuff, like Apple, and stocks in the Dow Transportation Average that ship stuff, hit record highs at the same time, said Bittles.