What trade war? The Dow just reached its first record high since late January.
This achievement indicates that Wall Street is largely untroubled by the intensifying trade dispute between the United States and China.
The Dow’s increase of 251 points on Thursday celebrated its 100th record close since the election of President Donald Trump, as noted by S&P Dow Jones Indices. The S&P 500 also achieved a new all-time high.
The Dow finished at 26,657, having climbed approximately 3,300 points since its dip on April 2, when trade worries dominated investor sentiment. They are confident that the robust US economy will withstand the wave of tariffs.
“The market demonstrates remarkable resilience,” remarked Paul Hickey, co-founder of Bespoke Investment Group.
Stocks surged late last year and in January following a significant corporate tax reduction passed by Republicans. This enthusiasm propelled the Dow from 25,000 to 26,000 in just seven trading days. Even the most optimistic market analysts began to question whether stock valuations were excessively high.
“In January, it seemed like the market couldn’t fail,” noted Dan Suzuki, portfolio strategist at Richard Bernstein Advisors. “That perception has changed.”
Ultimately, that rally collapsed in a dramatic turn, highlighted by two single-day declines of 1,000 points each. Wall Street was engulfed by worries regarding inflation and rising interest rates, marking one of the most alarming periods for US investors in recent years.
“Investor sentiment had reached extreme levels. The pullback served as a wake-up call. The extended absence of new highs has allowed the market to align with economic fundamentals,” Hickey explained.
The underlying economic indicators are very promising. Corporate profits have surged, driven by strong economic growth and the tax reform. The unemployment rate has fallen to just 3.9%, and US economic growth has accelerated to an annualized rate of 4.2%.
“What holds the most significance for investors is corporate earnings,” Suzuki stated. “The profit trends are robust and gaining momentum. This is incredibly positive for US stocks.”
UJ (New York) First published September 20, 2018: 9:58 AM ET
