Stocks push to records as economy cruises
Stocks and bond yields punched higher Wednesday, and U.S. indexes set records again, following more encouraging news on the U.S. economy.
The Standard & Poor’s 500 index rose 11.67 points, or 0.5 percent, to 2,349.25. It’s the seventh straight gain for the index and its longest winning streak in 3½ years. The Dow Jones industrial average rose 107.45 points, or 0.5 percent, to 20,611.86. The Nasdaq composite rose 36.87, or 0.6 percent, to 5,819.44. Seven stocks rose on the New York Stock Exchange for every five that fell.
It’s a striking reversal for the market from a year ago, when stocks around the world were tumbling on worries that another recession was on the way. Since then, the economy and job market have continued to improve, along with corporate profits. And the market got a jolt of adrenaline in November, when Donald Trump’s surprise White House victory raised hopes for tax cuts and other business-friendly policies from Washington.
Fed Chair Janet Yellen indicated in testimony before a Congressional committee that the central bank will likely accelerate its pace of increases if the job market remains healthy and inflation keeps climbing. The Fed has raised rates just twice in the last two years, after holding rates at nearly zero from late 2008 to help lift the economy out of the recession.
“What really stuck out to me in Yellen’s testimony was her adding emphasis to the idea that as things currently stand, even without fiscal stimulus, it would be prudent to hike sooner rather than later,” said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management. “So if we do see tax cuts or infrastructure spending, they may need to quicken the pace of rate hikes. The bond market has clearly gotten the message.”