2 mins to read

While you were sleeping: UPDATED Dow closes above 19,000 for first time

The Dow industrials is set to out-perform the S&P 500 on a yearly basis for the first time in five years.

Margreet Dietz
Wed, 23 Nov 2016

Wall Street again climbed to record highs on all main indexes as investors bet on an upbeat outlook for economic and corporate profit growth, while oil prices slid on a stalemate between Iran and Iraq on production cuts.

At the close, the Dow Jones Industrial Average rose 67.18 points, or 0.35%, to 19,023.87. The Nasdaq Composite Index added 0.3% to 5386.35 while the Standard & Poor's 500 Index 0.2% higher at 2202.94.

A fourth index, the Russell 2000 of small-cap stocks, is also at a record high of 1334.34.

The Dow last closed below 18,000 on November 4. Since then, a rally following the US presidential election has in particular benefited the shares of industrial companies and banks.

The blue-chip index is on track to post a stronger yearly performance than the S&P 500 for the first time since 2011.

Rapid post-election rise
The stampede into sectors that have lifted the Dow to new heights “happened so quickly and so parabolically,” Rob Bartenstein, chief executive of Kestra Private Wealth Services told Dow Jones. 

He adds he is surprised the index hit the 19,000 level just weeks after the election.

In the Dow, Verizon Communications and Home Depot shares, up 2.3% and 1.8% respectively, outweighed slides in Visa and Johnson & Johnson shares, down 2.7% and 1.9% respectively.

On Thursday, US markets will be closed for the Thanksgiving holiday.

Oil fell after Iran and Iraq appeared unlikely to accept new Opec production levels.

US Treasurys declined, pushing yields on the two-year note to the highest level in five years, reflecting increased bets the Federal Reserve will hike interest rates next month.

"After the Trump shock, it's easy for the Fed to hike because inflation expectations have gone up, as have stocks,” Tokyo-based Sumitomo Mitsui Trust Asset Management debt investor Hideaki Kuriki told Bloomberg.

He said he's "100%" certain of tightening next month.

Real estate sales rise
The spectre of higher rates also shows up in the real estate market.

The National Association of Realtors (NAR) reported existing-home sales increased 2% to a seasonally adjusted annual rate of 5.6 million in October, up from an upwardly revised 5.49 million in September.

October's sales pace is 5.9% above a year ago and surpasses June's pace as the highest since February 2007, NAR said.

"October's strong sales gain was widespread throughout the country and can be attributed to the release of the unrealised pent-up demand that held back many would-be buyers over the summer because of tight supply," NAR chief economist Lawrence Yun said.

"Buyers are having more success lately despite low inventory and prices that continue to swiftly rise above incomes."

In Europe, the Stoxx 600 Index ended the day with a 0.2% advance from the previous close. Germany's DAX Index gained 0.3%, while France's CAC 40 Index increased 0.4%, and the UK's FTSE 100 Index climbed 0.6%.

"We're continuing to see a post-US election rotation into sectors, with the main winners being in materials, and financials," Germany-based MPPM EK head of trading Guillermo Hernandez Sampere told Bloomberg.

In Europe, "we're still stuck in a trading range. If we manage to break through, we might see new highs for the year."



Margreet Dietz
Wed, 23 Nov 2016
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
While you were sleeping: UPDATED Dow closes above 19,000 for first time