Dow Jones Industrial Average (DJIA) achieved a new all-time high. Yet, it still has all 3 fundamental factors to push it even further.
The Dow Jones Industrial Average (DJIA)achieved a new all-time high on Monday. Yet, it still has all three fundamental factors to push it even further into an extended bull market.
Currently, theDow Jones is still hovering at (***************************************************,after rallying by more than percent year-to-date. It has strongly outperformed major stock indices such as the SSE Composite, Nikkei 225, and the FTSE 235.
# 1: No Rate Cut Likely Until
As reported by CCN, theUS stock market is pricing in a no rate cutin 2020 based on data from the CME futures market.
On December (********************************************************, the Federal Reserve said that the national benchmark interest rate will remain in between 1.5% to 1. 100% as it observes how the US economy performs.
The performance of the Dow Jones or the equities market is not equivalent to the state of the U.S. economy. The economyencompasses many other major componentssuch as the job market, business sentiment, productivity, and the housing market.
As Texas West trader Scott Melker said:
The stock market hitting all-time highs is a criminally misleading metric for the strength of an economy or country for its citizens. 75% of Americans own stock, including retirement accounts provided by employers. Some of those own only a few dollars worth.
While the rollback of December tariffs has benefited American farmers, the extent to which the phase one deal will improve the business confidence of the US in the imminent future is still debated.
As such, theFed’s decision to maintain an accommodative stanceamidst the longest bull market in the history of the US is a significant boost to the momentum of the Dow Jones.
# 2: Dow Jones Rises Inspite of Trade War
As famed investor Kevin O’Leary said, the tariffs imposed by the US on Chinese goodsare merely value-added tax (VAT), nothing more.
All other six countries in the G7 charge VAT to imports and the US has not done that for a long time.
O’Leary emphasized that even if the trade talks go sour and the phase one deal falls out causing December tariffs to be imposed, the Dow Jones will not act as badly as anticipated.
He said:
I keep saying to the Trump administration, keep going. Because I want to deal with China. Keep squeezing Chinese heads, don’t stop now.
The progress of the trade talks between the U.S. and China is certainly contributing to the improving outlook of the Dow Jones. But, the solid jobs market of the U.S. andsatisfying numbers across all major industriesare the main factors of the expanding economy.
# 3: US Economy Avoids Expected Breakdown
Up until September,fears of a recession intensifiedas the last month of the year often ended badly for the US economy based on historical data.
However, according to reports, theU.S. economy is set to expand heading into 219463with sustained growth despite the dealings with the trade war throughout 2019.
A gradually expanding economy put together with a strong jobs market and significant progress in the trade talks with China place the Dow Jones at a prime position to continue its record bull market.
This article was edited by (Samburaj Das) ****************************
Last modified: December (********************************************, 08: (UTC) *****************************
********************************Read More
GIPHY App Key not set. Please check settings