DOW TICKS UP PAST RECORD OF 25,000
Tax overhaul, global economy fuel rise as president suggests markets may hit 30,000
The Dow Jones industrial average, having passed five 1,000-point barriers in 2017, reaches another one.
The Dow Jones industrial average burst through the 25,000-point mark Thursday, just five weeks after its first close above 24,000.
The Dow passed five 1,000-point barriers in 2017 on its way to a 25 percent gain for the year, as an eight-year rally since the Great Recession continued to confound skeptics.
The bellwether gauge crossed the historic milestone shortly after the start of the day’s trading, a feat quickly touted by President Donald Trump on Twitter. “Dow just crashes through 25,000. Congrats!” Trump said. Later, speaking during a meeting with Republican lawmakers in the White House, Trump made a prediction: “I guess our new number is 30,000.”
Strong global economic growth and good prospects for higher company earnings have analysts predicting more gains, although the market may not stay as calm as it has been recently.
The Dow has made a rapid trip from 24,000 points on Nov. 30, partly on enthusi- asm over passage of the Republican-backed tax package, which could boost company profits this year with across-the-board cuts to corporate taxes.
“For a long while in 2017 I would say the biggest driver was excitement and anticipation over tax reform, but at a certain point I think there was a handover to global economic growth really helping to carry the stock market,” said Invesco Chief Global Markets Strategist Kristina Hooper.
Big gains in U.S. blue chip companies have powered the Dow’s relentless rise to new heights over the past year, including an 87 percent gain in aerospace giant Boeing, a 70 percent rise in construction equipment maker Caterpillar and a 49 percent increase in Apple.
And stocks’ record-breaking rise is likely not over, market analysts say. “I do believe we’ll see 30,000 before the bull market ends,” said Chris Zaccarelli, chief investment officer of North Carolina-based Independent Advisor Alliance.
But some market analysts cautioned that stock prices may be rising too fast.
“When markets move up this much and this fast, they often need time to take a break and let fundamentals catch up with the new valuations,” said Brad McMillan, chief investment officer for Commonwealth Financial Network. “So, enjoy the celebration and drink the Champagne. But remember this: 25,000 is not necessarily a sign that everything is as good as the head-
lines suggest.”
Indeed, the S & P 500 hasn’t dipped 3 percent in more than a year for the first time in recent history. Some investors appear to be ignoring the normal warning signals for fear that they could miss out on more profits if they sell now, market analysts said.
Rising U.S. tensions with North Korea, an economic slowdown in China, the fallout from Britain’s decision to leave the European Union and even a special prosecutor investigation into Russian meddling into the 2016 election have failed to shake investors. Stocks have continued to climb even as the Trump administration threatens to renegotiate trade deals that could spark retaliation by rivals such as China. Investors, so far, also have ignored the potential market volatility that could coincide with Federal Reserve plans to raise interest rates.
When stock prices inevitably begin to fall, the decline could be more dramatic and quicker than it has in the past, market analysts caution. An eventual correction could “take some of the froth out of the market,” a good thing, said Mark Stoeckle, chief executive of Adams Funds.
The Dow, which was founded in 1896 and is the oldest barometer of the U.S. stock market, has nearly quadrupled in value from its low during the financial crisis in early 2009. But the global economy and spending by people and businesses and governments were much slower to recover than stocks were.
“Instead of fiscal stimulus, we relied on monetary policy stimulus, which inflates asset prices as opposed to the overall economy,” Hooper said. Stocks have continued to climb as investors saw signs economic growth was finally improving.
Technology companies, which put up some of the biggest gains in the last year, continued to lead the market higher.
And there was more good economic news Thursday: A report showed private U.S. businesses added 250,000 jobs last month, with smaller businesses adding 94,000.
The Dow, which tracks 30 big U.S. companies, rose 152.45 points, or 0.6 percent, to 25,075.13.
The Standard & Poor’s 500, a much broader index that professional investors prefer to use as their benchmark for large U.S. stocks, rose 10.93 points, or 0.4 percent, to 2,723.99.
The Nasdaq composite, which is heavily weighted with technology and biotech companies, added 12.38 points, or 0.2 percent, to 7,077.91. All three indexes set record highs a day earlier.
The Nasdaq reached a milestone of its own this week, closing above 7,000 points for the first time Tuesday.
Indexes in some developing countries have done even better than those in Europe and the U.S over the past year. Brazil’s benchmark Bovespa is up 28 percent over the past year and the Hang Seng index in Hong Kong is up 39 percent.
It wasn’t all rosy Thursday. Intel continued to stumble after the discovery of serious security flaws in its computer processors. It lost 83 cents, or 1.8 percent, to $44.43 after a 3.4 percent decline Wednesday.
Benchmark U.S. crude rose 38 cents to $62.01 a barrel in New York. Brent crude, used to price international oils, added 23 cents to $68.07 a barrel in London.