President Donald Trump told the World Economic Forum in Davos, Switzerland that his administration is taking measures to promote security for American allies around the globe, saying “America is roaring back,” and now is the time to invest. (Jan. 26) AP
The Dow jumped more than 220 points on Friday to cap off another week with a fresh record high in the stock market.
The Dow Jones industrial average continued its surge to kick off 2018, rallying nearly 545 points this week to extend its year-to-date gain to 7.7%. The Dow, which has posted 11 record highs this year in just 18 trading days, closed at 26,616.71.
Also making fresh record highs Friday were the Standard & Poor’s 500 index and tech-dominated Nasdaq composite.
Driving the gains on Wall Street — which some investors are calling a “melt-up” — is the continued optimism after the government’s big tax cut, a strong start to the quarterly profit-reporting season, and a massive influx of new investing cash into the market.
A weakening dollar, which boosts sales and profits of big U.S. companies that do a lot of business abroad, and a strong global economy, is also powering stocks higher, says Quincy Krosby, chief market strategist at Prudential Financial.
“The market,” Krosby says, “has been buoyed by optimism.”
That optimism has gotten retail investors back into the market. A record $33.2 billion flowed into stock funds this week, according to Bank of America.
The Dow has rallied nearly 1,900 points so far in 2018.
Investors also reacted to more solid news on the economy. The government reported GDP growth of 2.6% in the just-ended fourth quarter of 2017, and while that fell short of the 3% estimate, the reading was still strong.
Friday’s gains also followed a speech delivered by President Trump to world leaders in Davos, Switzerland, where he promoted America’s recent successes, including a record high stock market, the highest consumer confidence in nearly two decades and low unemployment.
“America is open for business,” Trump told attendees at the World Economic Forum. “Now is the perfect time to bring your business and investment to the U.S.”
The stock market’s strong start to the year bodes well for the remainder of 2018, says Tom Lee, managing partner of New York-based investment firm Fundstrat Global Advisors.
“The parabolic January rise is a bullish signal,” he told clients in a report.
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