Dow closes above 30,000 mark for first time in history

Dow closes above 30,000 mark for first time in history

The Dow Jones Industrial Average closed above the 30,000 mark for the first time ever Tuesday as Wall Street cheered good news on coronavirus vaccines and a key step toward a peaceful transfer of power in Washington.

The blue-chip index surged 454.97 points, or 1.5 percent, to close at 30,046.24. Earlier in the session, the index hit 30,116.51, an all-time intraday high.

Investors were jubilant after President Trump directed his administration to start the formal process of handing control of the White House to President-elect Joe Biden, even as prospects continued to brighten that multiple and effective ­COVID-19 vaccines will be widely distributed next year.

More broadly, Wall Street analysts say investors are piling into stocks on signs that the coronavirus-battered economy is recovering amid record-low interest rates from the Federal Reserve and fiscal stimulus from the Treasury that have encouraged riskier investments.

“[Martin] Scorsese couldn’t script this!” exclaimed Phillip Streible, chief market strategist at Blue Line Futures. “Everything is so accommodative for the market: Rates are zero and growth is starting to kick in. Savings are maybe at their highest level. And now people are being forced to spend money.”

The benchmark S&P 500 and the tech-heavy Nasdaq rose 1.6 percent and 1.3 percent, respectively, as concerns ebbed about Trump refusing to cooperate with the presidential transition.

On Tuesday, Trump convened a surprise news conference at the White House that lasted about a minute in which he appeared to take credit for the Dow’s milestone.

“The stock market’s just broken 30 thousand. Never been broken, that number,” Trump told reporters. “That’s a sacred number, 30 thousand. No one thought they’d ever see it.”

It has been a roller-coaster year for the Dow. After flirting with the 30,000 mark in February, the index got clobbered as the coronavirus arrived in the United States a month later, briefly plunging below the 19,000 mark.

It has since clawed back those losses, with most analysts citing aggressive measures by the federal government to prop up the economy.

Tuesday’s gains put the Dow up about 1,404.10 points, or 5.6 percent, for the year. Streible gives credit to the market for weathering a contentious election cycle and anticipating an incoming Biden administration that is now taking shape.

“When Georgia called it, people were like, ‘It’s over,’ ” Streible said. “Bringing in Janet Yellen [Biden’s pick for Treasury secretary] is bringing in someone we know, someone we trust.”

US stocks have been on a tear since Election Day, lifted by the likelihood of a Republican Senate blocking big policy changes under Biden — including and especially big tax increases. Drugmakers’ major strides toward producing a coronavirus vaccine provided another boost.

View of the New York Stock Exchange.
AFP via Getty Images

“Trump’s attempts to overturn the election result was not the disruptive influence it could have been in the markets,” said Craig Erlam, senior market analyst at OANDA. “The reaction we’re seeing is probably more relief at the process delivering in the way we all expect it should.”

Still, crossing the 30,000 mark is just a “symbolic moment” for the market, according to James McDonald, CEO of Los Angeles-based Hercules Investments.

“It is simply a continuation of the market’s euphoria after the pre-election selloff,” he said. “At the end of the day, Dow 30,000 is just a number and the milestone doesn’t hold any credence in determining the near-term stock-market outlook.”

Indeed, it’s record government spending, and “full-blown market mania” that’s driving the Dow in recent weeks, versus economic fundamentals, said Zach Abraham, chief investment officer at Bulwark Capital Management. Still, he expects the Dow will continue to outperform other indices as many of its blue-chip components are trading at relatively low valuations, especially anything related to energy.

“It’s always historic when the Dow crosses these milestones,” Abraham said. “Pretty incredible in a year like 2020 that all of these indexes are pushing substantially higher.

“Investors should enjoy the gains, take it in, but make sure they’re rebalancing and taking profits.”