Dow Tops 20,000 as Earnings Feed Rally, Bonds Fall: Markets Wrap

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  • Blue chip index surges more than 100 points to take milestone
  • Mexican peso slumps on report Trump will seek border wall

The Dow Jones Industrial Average Surges Past 20,000

The Dow Jones Industrial Average climbed past 20,000 for the first time as stocks around the world extended a rally after corporate earnings reignited investors’ optimism in economic growth. Bonds sold off with oil.

Boeing Co.’s best rally in three months lifted the index for American blue chips past the round-number milestone after a handful of rallies fell short in the past month. Financial and technology shares surged as investors piled into stocks that benefit from economic growth. The yield on 10-year Treasury notes topped 2.50 percent. The dollar slipped, raising concern that the reflation trade in currencies may have run its course. The Mexican peso surged the most in 11 months even as Donald Trump ordered construction of a border wall. Oil fell on increased U.S. stockpiles.

“With a swift move towards signing executive orders, coupled with underlying positive economic data, clarity has begun to hit the headlines, and all the US indexes are celebrating,” Quincy Krosby, market strategist at Prudential Financial Inc. said. “Clarity is the markets’ oxygen.”

Corporate earnings bolstered the bullish sentiment toward equities, with Boeing the latest company to post results that topped expectations. The Dow is up 1.7 percent since Trump’s inauguration as he took steps to fulfill pro-growth campaign promises, including identifying possible infrastructure projects, approving two oil pipelines and cajoling American carmakers to build plants in the U.S. Other global-growth signals such as rising bond yields are feeding higher bank lending margins, and re-invigorated spending is boosting consumer cyclicals.

Read our Markets Live blog here.

Here are the main moves in markets:

Stocks

  • The Dow rose 155.12 points to 20,067.83 at 4 p.m. in New York, the first close above the round number. The rise from 19,000 was the second-fastest 1,000-point run in the measure’s history. It’s up 9.5 percent since Trump’s election.
  • Boeing led gains in the index, rising 4.2 percent to an all-time high after reporting a profit.
  • The S&P 500 Index jumped 0.7 percent to a record 2,295.95. Industrial, technology and financial shares led gains.
  • The Stoxx Europe 600 Index jumped 1.3 percent, while Germany’s DAX rose to the highest level since May.
  • Personal computer maker Logitech International SA led Europe’s stock gains after beating quarterly profit estimates, surging 16 percent. Banco Santander SA rose 3.4 percent on better-than-expected quarterly profits.

Bonds

  • The yield on the 10-year Treasury added five basis points to 2.52 percent, the highest level of the year.
  • Yields reached session highs after a $34 billion 5-year note auction stopped at 1.988 percent, about 1.2 basis points above where the note was quoted in when-issued trading at the 1 p.m. New York time bidding deadline.
  • The yield on the benchmark Bund due in a decade rose six basis points to 0.46 percent, the highest level in a year.

Currencies

  • The greenback weakened against all its Group of 10 peers except the Australian dollar, as the Bloomberg Dollar Spot Index resumed its slide. It fell 0.3 percent and is poised for a fifth straight weekly decline.
  • Losses were steepest against the Canadian dollar and the British pound.
  • The positive correlation between the dollar and Treasury yields, which touched 93 percent on Nov. 1, the highest in three years, has now declined to less than 54 percent. That in turn has helped spur gains in high-yielding, commodity currencies like the Australian and New Zealand dollars.
  • The Mexican peso gained more than 1 percent even as Trump took action to advance a border wall.

Commodities

  • The Bloomberg Commodity Index, which measures returns on raw materials, fell 0.4 percent.
  • Gold futures tumbled 1 percent to $1,201.90, for a second day of declines as optimism around corporate earnings fueled risk appetite.
  • West Texas Intermediate crude lost 0.8 percent to drop below $53 a barrel. It settled at $52.75 a barrel after a U.S. government report showed crude and fuel inventories increased.
  • OPEC and other oil producers are likely to comply fully with a deal to reduce supply, bringing global crude markets into balance early this year, Kuwaiti Oil Minister Essam Al-Marzouk said.

— With assistance by Natasha Doff, Cecile Gutscher, Eddie Van Der Walt, Mark Barton, Neil Denslow, Toshiro Hasegawa, Vonnie Quinn, Adam Haigh, David Goodman, and Todd White

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