Dow Jones index clears 20,000 points for first time
January 25, 2017
The Dow Jones crossed the 20,000 point threshold for the first time in its history as the stock market continues to react to the new economic policies announced by the White House.
The index had been rallying since Donald Trump's election victory in November and moved to within a point of the historic level on January 6, with investors placing their faith in Trump's promises of significant fiscal spending and far reaching tax cuts.
The blue-chip stocks index, which has been marching steadily higher since hitting rock bottom in March 2009, continued to rally after Trump's inauguration speech last Friday before finally hitting the landmark level Wednesday.
According to analysts, the shift was triggered by Trump's announcements Tuesday to wave through two major pipeline projects that had been blocked by the former administration.
'Pro-business administration'
Briefing.com analyst Patrick O'Hare told the news agency AFP that the pipeline decision was not a surprise as it was consistent with Trump's campaign rhetoric. "Yet it was a timely reminder for a listless market of the Trump Administration's push to increase economic activity in the US."
The rally prompted further stock buying by investors who were caught off guard in what O'Hare dubbed "FOMO" or the "fear of missing out" and the Dow was 20,010.71, up over 0.5 percent, 15 minutes into trading.
"It's time dust off those Dow 20k hats again, because the Trump rally is well and truly back on," said Neil Wilson, senior market analyst at ETX Capital. "We are clearly seeing a pro-business administration that is minded to action," Wilson added.
The other major US stock indexes were also moving higher - the Nasdaq rose 48 points to 5,600 - led by banks and other financial companies, as investors assessed the latest batch of company earnings and deal news.
Europe's index of 300 leading shares rose one percent and Germany's DAX rose 1.4 percent to a fresh 18-month high, while the UK FTSE 100's rise was limited to 0.3 percent, on account of the strong pound.
Earnings surge
Sentiment was also helped by better-than-expected fourth-quarter earnings. Of the 104 S&P 500 companies that have reported earnings so far, nearly 70 percent have beaten expectations, according to Thomson Reuters.
"Earnings growth hasn't been bad and there is some surprise to the upside too," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.
If the Dow remains above 20,000 by closing time, the 42-session surge from the first close above 19,000 would mark the second-shortest length of time between such milestones. The most rapid rise was between 10,00 and 11,000 from March 29 to May 3, which took 24 days. The rise from 18,000 to 19,000 took the Dow 483 trading sessions.
mds/uhe (Reuters, AFP)