The Dow Joins the Party

September 25, 2018 | posted in: Financial Insights, LPL Weekly Market Commentary | by

According to LPL Research, The Dow joined the S&P 500 in reaching fresh new highs last week. The record came after a drought lasting nearly eight months. The blue chip index has lagged the S&P 500 Index and Nasdaq Composite this year amid escalating trade tensions, which have weighed on the larger multinational U.S. companies that make up most of the 30-stock Dow Jones Industrial Average (Dow). This week, we’ll discuss the impact of the Dow’s new high and whether stocks have enough support from economic growth and corporate profits to build on recent gains.

Key takeaways include:

  • When the Dow hits a fresh record high after a long drought, as it did last week, it tends to be followed by above-average performance.
  • We believe the continued strength of the U.S. economy and corporate profits are the biggest reasons stocks have been resilient in the face of the ongoing trade dispute with China.
  • The market’s resilience in the face of rising interest rates is encouraging but not surprising based on history.

To read more from John Lynch Chief Investment Strategist, and Jeffrey Buchbinder, CFA Equity Strategist, LPL Financial, click here.