Dow Jones breaks the 20,000 barrier
Investors cheer as Trump sends Wall Street to record high
THE Dow Jones Industrial Average smashed through the 20,000 mark for the first time last night as global stock markets rallied.
Pro-business announcements from President Donald Trump helped push the index of leading US companies through the psychological barrier.
The S&P 500 and Nasdaq Composite also set records in New York while the FTSE 100 closed up 0.2pc at 7164.43 in London – although this was still some way short of its all-time high of 7337.81 earlier this month.
The milestone on Wall Street was welcomed by Trump who tweeted: ‘Great! #Dow20K’ and his senior adviser, Kellyanne Conway, who hailed ‘The Trump effect’ on the stock markets.
Chris Beauchamp, chief market analyst at IG in London, said: ‘The news has already been lauded by President Trump as a sign of the health of the American economy, although little has changed since the election or inauguration.’
The Dow had been edging towards 20,000 since Trump was elected on the promise of lower corporate taxes and more government spending. It is hoped his policies will lead to stronger growth and inflation, boosting the earnings of corporate America.
Since taking office on Friday he has restarted huge gas pipeline projects across the US mid-north and reiterated promises to build a wall along the US-Mexico border.
He also insisted that domestic steel be used for US pipelines, leading investors to pour money into construction.
Industrial giants General Electric and Caterpillar were among yesterday’s biggest gainers, pushing the Dow up 155.8 points to 20,068.51. It has now surged nearly 10pc since Trump’s election in November.
Aeroplane maker Boeing also helped move the markets as it posted better-than-expected results while investment banks such as Goldman Sachs and JP Morgan were also on the rise on signs Trump will slash red tape.
Jasper Lawler, senior market analyst at London Capital Group, said: ‘It is our view that the gains in the stock market are not just a function of companies winning infrastructure business. Investors are gaining certainty from Trump turning his promises into reality.’
The Dow has gained more than 1,700 points since November 8. It has not made such significant gains in such a short period of time since May 1999 – although that was followed by a crash.
Lawler said he would now be watching for ‘psychological factors’ at work among investors, including a ‘fear of missing out effect on the under-invested, generating more buying interest’.
But he added: ‘On the other hand, the 20,000 level will attract profit-taking from some long-time stock market bulls, causing a counteracting selling force.’
And Nathan Sweeney, senior investment manager at Architas said: ‘Investors remain cautious about the state of the markets. Given we are eight years into a bull run investors are rightly torn about the outlook.’
Laith Khalaf, senior analyst at savings and investments firm Hargreaves Lansdown, said: ‘The Trump bump has propelled the Dow Jones to an unprecedented level. In the short-term the stock market could move in either direction, but for long-term investors it still makes sense to keep a healthy slug of their portfolio in equities.’