Dow tops 18,000 for first time ever
NEW YORK (CNNMoney) — New Year’s Eve is still more than a week away, but investors can bust out the bubbly now.
The Dow hit the 18,000 milestone for the first time ever Tuesday, putting an exclamation point on a stellar year. Not to be outdone, the S&P 500 is also trading at an all-time high. The two indexes are now up nearly 9% and 13% in 2014, respectively.
The market jump came as investors learned that the U.S. economy grew at an incredible 5% in third quarter. It was the strongest quarter of growth since 2003.
“The economic recovery seems to stay on track while gradually improving and increasing its rate of growth,” wrote David Kotok of Cumberland Advisors, in a note Tuesday morning. “That’s good for stocks.”
He also credited low interest rates and inflation, as well as corporate profitability, as catalysts for the market’s big run.
The so-called “Santa Claus rally” is typical for this time of year, as institutional fund managers load up on winning stocks in an attempt to show investors that they hold the year’s top performers in their portfolio.
“It’s Beginning to Look a Lot Like Christmas,” said Tom Stringfellow, President and Chief Investment Officer of Frost Investment Advisors.
The S&P 500 experienced its 50th record finish of the year Monday, while the Dow closed at its 35th record.
Even more, investors “have no reason to sell any of their biggest winners and incur a 2014 tax liability in the last few days of the year,” said Tim Anderson of MND Partners.
But it the month didn’t start out looking like a December to remember. Investors had an early holiday scare as worries began to mount that tumbling oil prices would do real damage to the American energy renaissance. The industry has been a big driver of growth since the recession.
But an overall healthy economic picture and a Federal Reserve determined to keep the market happy by vowing to be “patient” when considering interest rate increases seemed to put an energy fears to bed.