Dow ends above 25,000, Wall St extends new year’s rally

Traders work on the floor of the Dow Industrial Average at the New York Stock Exchange on Jan 2, 2018.
Traders work on the floor of the Dow Industrial Average at the New York Stock Exchange on Jan 2, 2018.PHOTO: AFP

NEW YORK (REUTERS) – The Dow industrials broke above the 25,000 level for the first time on Thursday (Jan 4) and other major indexes hit closing record highs again, propelled by strong global economic data that extended the new year’s rally for the stock market.

The 30-member blue-chip index crossed five 1,000-point marks in 2017 on the back of US President Donald Trump’s pro-growth agenda and solid corporate earnings.

It took less than a year for the Dow to add a 5,000-point milestone, which is the fastest since the index was created in May 1896.

Wall Street has started 2018 on a strong note. The benchmark S&P index closed above 2,700 for the first time on Wednesday and the Nasdaq settled above 7,000 a day earlier. Both indexes also registered closing record highs on Thursday.

Strong manufacturing and services sector data from the world’s largest economies provided a bullish tone on Thursday, while other data showed US private employers stepped up hiring in December. Friday will bring the key US non-farm payrolls report.

“There are expectations we will see volatility creep back into the market and pull this market down,” at some point this year, said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.

“But as long as you have economic growth and earnings moving higher... there’s still a solid underpinning,” she said.

The rally shows “investors are expecting conditions to remain solid at least in the initial couple of months.”

The Dow Jones Industrial Average rose 152.45 points, or 0.61 per cent, to 25,075.13, the S&P 500 gained 10.93 points, or 0.4 per cent, to 2,723.99 and the Nasdaq Composite added 12.38 points, or 0.18 per cent, to 7,077.92.

The Cboe Volatility Index, better known as the VIX and a popular options-based gauge of expected near-term price volatility, closed at 9.22. The index has been flirting with record lows in recent months.

Financials led gains on the S&P 500 on Thursday, with Wells Fargo up 1.3 per cent, JPMorgan Chase up 1.4 per cent and Goldman Sachs also up 1.4 per cent.

“There were very positive notes on the banks today so that set the tone for the group,” said R.J. Grant, head of trading at Keefe, Bruyette & Woods in New York.

“As we head into earnings, a lot of people will take a break. The banks are well owned. People are positive, but the banks are due for a little pause.”

S&P 500 companies are expected to soon begin reporting quarterly earnings, with JPMorgan results due next week.

On the downside, Victoria’s Secret owner L Brands slid 12.3 per cent on a disappointing quarterly earnings forecast.

Macy’s shares fell 3.3 per cent after reporting only modest growth in holiday sales and saying it would close stores and slash thousands of jobs this year.

Other department store operators including J.C. Penney also tumbled.

Advancing issues outnumbered declining ones on the NYSE by a 1.46-to-1 ratio; on Nasdaq, a 1.50-to-1 ratio favoured advancers.

Volume held up despite a powerful blizzard that caused power outages and travel problems in the US north-east, and walloped New York City with snow.

About seven billion shares changed hands on US exchanges, above the 6.3 billion daily average for the past 20 trading days, according to Thomson Reuters data.