By Thomas Heath
The Dow Jones industrial average blew past 26,000 Tuesday for the first time ever, coming only a week after hitting 25,000 and showing further evidence that the long-running bull market is alive and well.
“There are several reasons for markets to melt up at this point,” said Alexandra Coupe, associate director for PAAMCO.
The Dow had crossed 25,000 on Jan. 4, the third trading session of this year.
Coupe cited the tax overhaul, earnings, good economic data and investor enthusiasm for the continued surge. “These dynamics underpin a ‘me too’ investor euphoria, which is carrying the Dow up and over 26,000,” she said.
The Dow is up more than 5 percent after only 16 days in 2018. The question on many investors’ minds is how far can it go.
Billionaire investor Sam Zell said on CNBC’s “Squawk Box” Tuesday morning, “I think the current situation seems like irrational exuberance.” Zell was echoing a widely-quoted statement that then-Federal Reserve Chairman Alan Greenspan issued in 1996, when the market was frothy.
Zell, known for his real estate success, said much of his assets are in cash.
The Dow’s inexorable climb continues even after a 25 percent increase in 2017. It was up 200 points in early trading Tuesday following an expected opening in the 250-point range. The Nasdaq, Standard & Poor’s 500 index and Russell 2000 were all up between roughly 0.5 and 1 percent
The Dow’s big gainers were Merck, UnitedHealth and Boeing, the aircraft manufacturer whose popularity with investors was a big contributor to the Dow’s success in 2017.
Daniel Weiner, chief executive of Adviser Investments, put some context into the climb, noting that the Dow is so rich that 1,000-point gains are a smaller percentage than they were earlier in the bull.
“Crossing the 26,000 'milestone' only requires a 4 percent gain from the 25000 ‘milestone,’ Weiner said. “If it does so today, in just seven trading days, that may be the fastest crossing ever, yes. But put into context the Dow has risen 4 percent or more over seven trading days 110 times since the market bottomed in March 2009.”