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Friday 19 October 2018

US stock rally lifts Dow to first close above 26,000 points

The US stock market has had a stellar start to the year.

Financial Markets Wall Street
Financial Markets Wall Street

By Alex Veiga

A broad rally on Wall Street propelled the Dow Jones industrial average to close above 26,000 points for the first time Wednesday.

The sharp gains also delivered record highs for the Standard & Poor’s 500 index and the Nasdaq composite, wiping out the market’s modest losses from a day earlier.

Technology and health care companies accounted for much of the gains.

Financials stocks also rose, even as some big banks fell after reporting hefty quarterly losses.

“As yesterday’s pullback suggests, investors and traders will come back into a market in which they still see an upside,” said Quincy Krosby, chief market strategist at Prudential Financial.

“But the market remains overbought, and an overbought market is susceptible to a pullback.”

The Dow gained 322.79 points, or 1.3%, to 26,115.65.

The S&P 500 index rose 26.14 points, or 0.9%, to 2,802.56. The Nasdaq added 74.59 points, or 1%, to 7,298.28. The Russell 2000 index of smaller-company stocks picked up 13.69 points, or 0.9%, to 1,586.66.

The Dow traded above the 26,000-point threshold on Tuesday, but wound up closing lower.

Its surge Wednesday was driven in part by a gain in Boeing, which posted the biggest gain in the 30-company average.

With the stock market reaching records so often, 1,000-point moves in the Dow have become increasingly commonplace.

It has been just eight trading days since the Dow had its first close above 25,000 on January 4. That is faster than the 23 days it took the Dow to go from 24,000 to 25,000 points.

The stock market is off to a stellar start in 2018. The S&P 500 index has closed lower only twice this year. It capped last week with its seventh weekly gain in the past eight.

Investors have been encouraged by strong global growth, rising company earnings and the prospects for further corporate profits thanks to the tax overhaul signed into law last month, which cut the top tax rate for corporations from 35% to 21%.

Technology stocks were again some of the biggest winners. Lam Research led the S&P 500 with a gain of 14.69 dollars, or 7.7%, to 205.08 dollars. Investors also bid up health care stocks, including Anthem. The insurer added 7.40 dollars, or 3.1%, to 249.15 dollars.

Industrial stocks rose after the Federal Reserve said US industrial production increased 0.9% in December. Boeing rose 18.85 dollars, or 4.7%, to 351.01 dollars.

Juno Therapeutics soared 51.9% after the Wall Street Journal reported that biotech drugmaker Celgene might buy it.

Juno is one of several companies developing therapies that involve genetically engineering patients’ blood cells to fight cancer. Juno rose 23.65 dollars to 69.25 dollars. Celgene fell 2.80 dollars, or 2.7%, to 102.02 dollars.

Some big companies were left out of Wednesday’s rally.

Ford Motor slumped 7% after the carmaker gave a disappointing profit forecast for the year because of weaker sales in the US, higher commodity costs and its investments in new electric and hybrid cars.

The stock was the biggest decliner in the S&P 500, giving up 92 cents to 12.18 dollars.

Goldman Sachs and Bank of America also closed lower after their latest quarterly results disappointed Wall Street.

Goldman said it lost 1.93 billion dollars in the fourth quarter as the investment bank had to record more than four billion dollars in charges related to the new tax law.

Goldman’s trading desks had a weak quarter. The stock declined 4.81 dollars, or 1.9%, to 253.65 dollars.

Bank of America’s fourth-quarter profits fell by nearly half from a year ago, as the bank had to book 2.9 billion doallars in charges related to the tax law. The stock slid six cents, or 0.2%, to 31.18 dollars.

The price of bitcoin extended its slide Wednesday, though by late afternoon it had pared most of its losses from earlier in the day. The digital currency fell 1.6% to 11,172 dollars, according to the tracking site CoinDesk.

Bitcoin futures on the Cboe Futures Exchange fell 2.6% to 10,820 dollars. The futures allow investors to make bets on the future price of bitcoin. Many finance experts believe bitcoin is in a speculative bubble that could burst any time.

Press Association

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