Dow could reach 30,000

Index has set more than 60 record highs this year and likely won’t stop

The Dow’s milestone mania may have more room to run.

After topping 24,000 last week and surging nearly 300 points Monday on optimism that a tax overhaul plan is moving closer to reality after the Senate passed a bill over the weekend, Wall Street bulls say Dow “25K” is pretty much a sure thing.

But the rally, they say, likely won’t stop there.

The skyrocketing blue-chip stock gauge might not stop going up until headlines trumpet Dow 30,000, bulls say. And Dow 30K — an additional 22 percent gain from current levels — is not an unthinkable level to attain before the average peaks and enters the next bear market, or protracted decline of 20 percent or more.

The Dow this year has already barreled through 20,000 and four other thousand-point milestones on its way to 63 record highs.

“This rally looks bulletproof because every area of the economy is seeing gains,” said Chris Rupkey, chief financial economist at MUFG, a New York-based bank. “Twenty-five thousand is too close, and no one sees that as a ceiling. Thirty thousand may be more likely as a stopping point.”

If the Dow’s performance in 2018 is similar to its year-to-date gain of roughly 23.5 percent, it could reach 30,000 sometime next year. If the market matches its long-term average annual gain of about 10 percent, however, it would surpass 30K sometime in 2020.

The Dow jumped nearly 300 points Monday to an intraday record of 24,534.04 as investors’ moods got a boost from the Senate’s vote to pass its tax bill, which is seen boosting corporate profits.

The hopes for sizable tax reductions for American corporations have been a main pillar of Wall Street’s bullish view of stocks this year and next. The Senate bill slashes the corporate tax rate to 20 percent from 35 percent. The final tax bill still needs to be ironed out by the House and Senate.

Last week, however, ended on a volatile note for the U.S. stock market after President Donald Trump’s former national security adviser, Michael Flynn, pleaded guilty Friday to lying to the FBI and said he was cooperating

with prosecutors in the probe related to Russia’s meddling in the U.S. presidential election.

The news renewed political uncertainty and raised fresh questions as to the Trump campaign’s ties to Russia.

Bearish investors warn of turbulence ahead, citing pricey stocks, the expectation for higher rates and early signs of irrational exuberance.

But the Dow’s latest rally could be a sign of things to come, bulls counter.

The path to Dow 30,000, Rupkey said, will be driven by successful Dow components like Boeing, UnitedHealth, 3M, Apple, McDonald’s, Caterpillar and Home Depot — companies that have strong earnings potential as the U.S. economy gains momentum.

“We aren’t talking Bitcoin here,” said Rupkey, referring to the highly volatile and speculative digital currency that has rallied roughly 1,000 percent this year. “This handful of companies driving the rally this year are the heart of America. Betting against the economy is a fool’s bet.”