Dow smashes 24,000 as tax bill, robust US and world economies inspire surge
The Dow Jones Industrial Average smashed the 24,000 mark and then some as an abundance of news from Capitol Hill, world economies and the US national economy sent stock indexes to rousing heights.
The Dow closed at 24,272, up 331 points on the day and gaining 1,000 in the past month. The Standard & Poor 500 index had its best day since March 1, closing at 2,647.
Markets responded positively to reports that Republicans were making progress on President Trump’s legislation to reduce corporate taxes. News reports that Republican Senator John McCain of Arizona was backing the plan gave supporters hope that the bill may get enough votes for passage.
Reports that North Korea had tested a nuclear missile capable of reaching the US mainland failed to douse the enthusiasm.
Boeing, United Technologies and Goldman Sachs were among the Dow’s leaders on Thursday.
“It’s all about tax reform,” said Ivan Feinseth, chief investment officer at Tigress Financial Partners. “You increase corporate earnings, the stock price goes higher.”
Oil companies such as Chevron and Exxon were up more than 1 per cent on news from Vienna, where the Organisation of the Petroleum Exporting Countries and Russia, two of the world’s leading oil producers, agreed to extend an cut in crude production another year. Oil cuts translate into higher prices for a barrel of oil, which in turn lift oil company profits.
Financial stocks were bolstered by a rise in US Treasury yields, which helps lenders make more money. State Street, JPMorgan Chase and Capital One Financial all finished up for the day.
The US Labour Department reported on Thursday that the number of Americans filing for unemployment benefits fell for a second week. The US jobless rate is at a 17-year low.
The Commerce Department reported that Americans’ spending grew 0.3 per cent in October, its fastest pace in nearly a decade. US personal incomes rose even as inflation stays stubbornly low.
“Besides tax reform, which is moving faster than anyone expected just a week ago, the global economy continues to improve,” said Ryan Detrick, senior market strategist with LPL Financial. “There’s a lot of positives in the US, but we are seeing extremely strong earnings in developed countries and emerging markets. The last time we saw positive news on all three of those was 2010. There is very little chance of (a) recession next year.”
New reports on Wednesday said the US economy was at peak performance, with growth in the last two quarters exceeding 3 per cent. Many observers believed that a growth rate exceeding 3 per cent was unattainable.
Shares of grocery giant Kroger were up more than 8 per cent after the company beat earnings estimates.
“We are in a booming economy,” Feinseth said. “It is incredible that there is a global synchronisation of world economies right now. You have a number of world markets hitting new, all-time highs.”