By Selina Stoller, Summit Consumer Receivables Acquisitions, LLC
Wall Street isn’t worrying about tariffs or inflation after a new record high.
The Dow’s 251-point leap last week 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, and the Nasdaq was close to record numbers.
This milestone proves Wall Street is unfazed by possible trade disagreements between the United States and China.
“The market is showing incredible strength,” Paul Hickey, co-founder of Bespoke Investment Group said.
The Dow closed at 26,656 and has spiked about 3,300 points since a low on April 2 when investors seemed more concerned. Even though President Trump hit China with a 10 percent tariff on $200 billion in additional goods this week, investors are focused on America’s well–performing economy and betting the US economy will continue to power ahead of the rest of the world despite tariffs.
Investors don’t seem bothered by inflation either.
Bond yields in the US have been rising while with the Dow and S&P both hit all-time highs. The 10-Year Treasury yield relatively low, but has topped the psychologically important 3 percent threshold and is currently teetering around 3.1 percent.
Some experts caution this may be just the beginning of inflation. Investors anticipate longer-term rate continuing to rise, but gradually. The Federal Reserve is expected to raise short-term rates again before the end of the year. In theory, higher rates should lead to slower growth for both the economy and corporate earnings. Inflation is still under control for now.
Thanks to strong economic growth and tax legislation, corporate earnings have gone through the roof, the unemployment rate had dropped to just 3.9 percent, and the US economic growth has reached an annualized pace of 4.2 percent. Wall Street is proof that America’s economy is on a roll.
- 27 Sep, 2018
- Josh Smith