Post-Election Wall Street Continues Rally To New Record
US stocks continue breaking records, extending their surge amid general market enthusiasm and a renewed sell-off in bonds, after Mario Draghi, President of the European Central Bank, signaled he will bolster stimulus in the euro area if a proposed reduction in the current level of asset purchases fails to shore up the economy. Investors have driven up equities since Trump's Nov. 8 election over optimism about domestic economic stimulus and reduced corporate taxes and regulations.
By Paolo Palazzi-Xirinachs
Thursday, December 8, 2016 - 00:00
The European Central Bank’s pledge to cut bond buying, while extending quantitative easing until the end of 2017 initially propelled gains in the euro. The common currency reversed its climb after President Draghi kept the option open to add to asset purchases. The S&P 500 Index tracked gains in European stocks as emerging-market equities also rallied. Treasuries slipped with sovereign debt across Europe. Oil rose above $50 a barrel in New York.
At today's close, the Dow Jones industrial average rose 65.19 points, or 0.33%, to 19,614.81, the S&P 500 gained 4.84 points, or 0.22% percent, to 2,246.19 and the Nasdaq added 23.59 points, or 0.44% to 5,417.36.
All three indexes set new records, a day after they each posted gains of at least 1%. The Russell 2000 index of small-cap stocks, which has soared 15% since the election, also hit a new high. Financials, among the major gainers since the election, led the way again on Thursday, rising 0.9%. Industrials, another post-election beneficiary, fell back 0.5%, weighed down by defense stocks.
While investors are still adjusting to the economy's outlook under a Trump administration, generally speaking, the idea that taxes will be less and regulations will be dialed back seems to be creating not only optimism but perhaps even laying the groundwork for economic expansion.
Adding to positive sentiment for equities has been recent positive economic data, as well as S&P 500 companies poised to end a streak of declining profits with their third-quarter results.
Investors on Thursday were digesting the European Central Bank's decision to trim back its asset buys but also its vow of protracted stimulus to aid a still-fragile recovery.
Next week's Federal Reserve meeting, at which the US central bank is widely expected to raise interest rates, is also coming into focus as market participants seek clues about the future pace of any rate hikes.
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