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What trade war? Dow hits record high

What trade war? The Dow just soared to its first record high since late January.The milestone shows t...

Posted: Sep 21, 2018 4:43 AM
Updated: Sep 21, 2018 4:43 AM

What trade war? The Dow just soared to its first record high since late January.

The milestone shows that Wall Street is mostly unfazed by the escalating trade clash between the United States and China.

The Dow's 251-point leap on Thursday marked its 100th record close since President Donald Trump's election, according to S&P Dow Jones Indices. The S&P 500 also notched an all-time high.

The Dow closed at 26,657. It has spiked about 3,300 points since a low on April 2, when investors were more worried about trade. They're betting that the strong US economy will power through the outbreak of tariffs.

"The market is showing incredible strength," said Paul Hickey, co-founder of Bespoke Investment Group.

Stocks spiked late last year and in January after Republicans enacted a sweeping corporate tax cut. The euphoria sent the Dow soaring from 25,000 to 26,000 in just seven trading days. Even market optimists were questioning whether stock valuations had gotten out of hand.

"In January, it felt like the market was bulletproof," said Dan Suzuki, portfolio strategist at Richard Bernstein Advisors. "That's no longer the case."

Eventually, that rally crumbled in dramatic fashion, punctuated by two single-day 1,000-point plunges. Wall Street was overcome by fears about inflation and spiking interest rates. It was the scariest moment for US investors in years.

"Sentiment had gotten really out of hand. The pullback was a reality check. The lack of a new high for so long has let the market play catchup to fundamentals," Hickey said.

And the fundamentals look very good. Corporate earnings have gone through the roof, thanks to strong economic growth and the corporate tax cut. The unemployment rate has dropped to just 3.9%. And US economic growth has climbed to an annualized pace of 4.2%.

"What matters most to investors is corporate profits," Suzuki said. "The profit trends are healthy — and accelerating. That's tremendously bullish for US stocks."

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A cold front moved through last night, giving us thunderstorms but left us with a significant cool down from the heat we've had the past couple of weeks. Today we saw a few light showers and temperatures in the low 80s for our high. Tonight should be cool as well with lows in the lower 60s and calm winds. Dry and sunny conditions continue into next week as temperatures stay seasonal. Highs look to stay in the 80s until midweek and the humidity will be moderate, feeling a lot more comfortable than last week. Scattered showers and storms will continue off and on mainly through the morning and afternoon hours on Saturday. Temperatures will be much cooler on Saturday with highs in the mid 80s. Dry and sunny conditions will take over on Sunday and continue into next week as temperatures stay seasonal.
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