Markets were upbeat ahead of a bumper week of corporate earnings in the US. But as David Pollard reports, oil, the euro and China could also shift sentiment.
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The milestone-busting Dow topped 26,000 for the first time Tuesday as stocks continue to surge at the start of 2018 amid rising optimism that tax cuts will lift corporate earnings and the economy.
The blue-chip stock index rallied more than 200 points in early trading Tuesday, eclipsing “26K” just 12 calendar days after toppling the 25,000 milestone.
Stocks have picked up where they left off in 2017, with investors piling into the market as Wall Street analysts are boosting their projections of how much money U.S. companies will make this year after Congress slashed the corporate tax rate late last year to 21% from 35%.
The Dow, which gained 25% last year, is off to a fast start in 2018. Heading into today’s trading action, it was up nearly 1,100 points, or more than 4%.
Some Wall Street pros are starting to worry that investors are getting overly exuberant, despite the improving business conditions that are driving stocks higher early in the new year.
“At some point something happens that crystallizes the confidence of investors and makes it seem likely (that the good times) will go on forever — and investors go from positive to all in,” says Brad McMillan, chief investment officer at Commonwealth Financial Network. “We seem to be seeing that now.”