By Yashaswini Swamynathan, Rodrigo Campos and Chuck Mikolajczak
The Dow Jones Industrial Average extended gains in late morning trading after hitting 20,000 for the first time on Wednesday as strong earnings and President Donald Trump's pro-growth comments and initiatives reignited a post-election rally. Trump has taken several business-friendly decisions since taking office on Friday, including signing executive orders to clear the way for the construction of two oil pipelines. The S&P 500 and the Nasdaq Composite indexes also hit record intraday highs, amid gains across sectors. The Dow came within a point of the historic mark on Jan. 6, as investors banked on pro-growth policies and tax cuts many expect from the new administration. However, the index had struggled in recent weeks as investors grew cautious as they looked for clarity on the new administration's policies. "It's a milestone," said Thomas Roth, head of U.S. Treasury trading at MUFG Securities in New York."It reflects the belief that the pledged tax cuts, deregulation and other fiscal stimulus is going to be more business friendly and grow profits."
Trump tweeted "Great!#Dow20K".Sentiment has also been helped by better-than-expected fourth-quarter earnings. Of the 104 S&P 500 companies that have reported earnings so far, nearly 70 percent have beaten expectations, according to Thomson Reuters I/B/E/S."Earnings (growth) hasn't been bad and there is some surprise to the upside too," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.If the Dow remains above 20,000 by closing time, the 42-session surge from the first close above 19,000 would mark the second-shortest length of time between such milestones.
The most rapid rise was between 10,00 and 11,000 from March 29 to May 3, which took 24 days. The rise from 18,000 to 19,000 took the Dow 483 trading sessions.The surge since Nov. 22, when the index closed above 19,000 for the first time, has been spearheaded by financial stocks - with Goldman Sachs and JPMorgan accounting for about 20 percent of the gain. On Wednesday, Boeing rose 4 percent after its earnings and IBM gained 1.7 percent, helping to push the index over the top. Goldman rose 0.9 percent. At 11:03 a.m. ET (1603 GMT), the Dow was up 153.51 points, or 0.77 percent, at 20,066.22. Of its 30 components, only five stocks were lower.
The S&P 500 was up 15.27 points, or 0.67 percent, at 2,295.34 and the Nasdaq Composite was up 45.47 points, or 0.81 percent, at 5,646.42.Eight of the 11 major S&P 500 sectors were higher, led by a 1.05 percent rise in financials. Utilities, real estate and telecom services - defensive parts of the market - were the outliers. Advancing issues outnumbered decliners on the NYSE by 1,918 to 903. On the Nasdaq, 1,923 issues rose and 737 fell.The S&P 500 index showed 74 new 52-week highs and one new low, while the Nasdaq recorded 158 new highs and nine new lows. (Reporting by Yashaswini Swamynathan and Tanya Agrawal in Bengaluru; Editing by Anil D'Silva)
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Updated Date: Jan 25, 2017 22:45 PM