Dow tops 19,000 as investors look to riskier assets

Lu Wang
Bloomberg News

U.S. stocks extended all-time highs, with the Dow Jones Industrial Average topping 19,000 for the first time and small caps clocking the longest rally in 20 years, as investors poured into riskier assets on speculation growth will accelerate.

The Dow rose 0.4 percent to 19,023.6 at 4 p.m. in New York, adding to an all-time high. The S&P 500 Index climbed 0.2 percent to 2,202.91, a fresh record. The Russell 2000 Index pushed its 13-day rally to 15 percent and the Nasdaq Composite extended its highest level ever.

The rally in equities that took four stock benchmarks to simultaneous records Monday continued as Donald Trump’s presidential win has fueled optimism that his pledge to cut taxes and increase fiscal spending will benefit industries more geared to the economic cycle.

The fresh equity records also came as American companies ended a five-quarter profit slump.

“The market is a lot more sure of itself now,” said Heinz-Gerd Sonnenschein, an equity strategist at Deutsche Postbank AG in Bonn, Germany. He predicts the S&P 500 will rise another 9.2 percent by the end of 2017. “Stocks are no longer stuck in that frustrating range and we’ve finally broken through to new records. We can move on to pricing in the improving outlook: there are strong signs that the U.S. economy is in good shape and that bodes well for corporate earnings.”

Traders have also boosted bets for tighter monetary policy since the vote, on speculation Trump’s policies will lead to higher inflation. After Federal Reserve Chair Janet Yellen acknowledged last week the strength in the economy, saying that the central bank is close to raising rates, traders are now pricing in a 100 percent chance of a move in December.

Reports on new home sales, durable goods and manufacturing are due Wednesday, as well as minutes from this month’s Fed meeting. U.S. markets will be closed on Thursday for the Thanksgiving holiday.

It’s been almost two years since the Dow closed above 18,000, a stretch during which stocks endured everything from falling earnings to the first interest-rate increase in nearly a decade to surprise political outcomes in the U.S. and Europe.

While the thousand-point trip was four times as long as the previous one, the ascent is the latest sign of resilience in a bull market that’s within months of reaching its eighth anniversary.

The 19,000 milestone arrived 700 days after the Dow crossed 18,000 on Dec. 23, 2014 for the sixth-slowest trip between thousands, data compiled by Bloomberg and S&P Dow Jones Indices show.

It took the index almost 5,200 days to go from 1,000 to 2,000 between 1972 and 1987, and the fastest was 35 days to 11,000 in May 1999.

Since eclipsing the 15,000 threshold in May 2013 for the first breaking of a 1,000 mark in this bull market, the average time the Dow took to travel the distance had been 198 days. The advance from 17,000 to 18,000 occurred during the 173 days July to December in 2014.

Among shares moving in New York trading, Signet Jewelers Ltd. jumped after raising its annual earnings forecast. Dollar Tree Inc. rallied as it reported sales that beat projections. Whiting Petroleum Corp. rose after selling pipelines and natural-gas processing facilities in North Dakota to Tesoro Corp. for $700 million. Palo Alto Networks Inc. slumped after its revenue and profit forecasts for the current quarter missed analysts’ estimates.