Wall Street’s winning streak: Stocks surge and hit record highs

Global Business

Wall Street's winning streak: Stocks surge and hit record highs

2017 have seen surging U.S. stocks, with a marked number of record highs for the Dow Jones, S&P 500 and Nasdaq.

But what’s behind the increase? A tweeting President or company performance?

CGTN’s Nick Harper reports.

Wall Street’s three leading indices heading higher has become a regular occurrence for broadly one reason.

“The global economy is doing better, Europe is turning, China has turned at a very strong first quarter, first half, the emerging markets are turning,” Steven Blitz, chief economist at TS Lombard said. “And a larger percentage of S&P revenue comes from global sources as opposed to say 10, 15, certainly 20, 25 years ago.”

By mid-August, the Dow Jones had notched up 35 record closes in 2017 alone. It’s now half-way to its best ever year-1995’s 70 record closes.

And it’s not just the Dow – the S&P has rung up 30 record highs. While the Nasdaq has managed 44-the most since 1999.

Strong U.S. earnings have helped. The S&P 500 is reporting two consecutive quarters of double-digit earnings growth-something investors haven’t seen since 2011.

Plus, low unemployment and low inflation have given extra confidence to invest on Wall Street and spend on Main Street.

Businessman-turned-President, Donald Trump has noted the market increases since he was elected.

But analysts said it’s more a case of good timing for the President – that the markets would likely have reacted this way no matter who was in charge.

“I think it has nothing to do with him. Because you can’t point to something and say that affected the economy, that affected employment, that affected earnings,” Douglas McIntyre, an analyst from 24/7 Wall Street said. “Most of these things are driven by an economic engine that has been going for seven or eight years. So I don’t know you could say he could either be faulted or that you could him credit for this.”

But beware unexpected events that economists call “black swans.” Geopolitical tensions with the Democratic People’s Republic of Korea have upset the markets.

While, domestically, more stalling over health care and tax reforms could trigger a sell off.

No one is forecasting that. Although August and September are historically the worst two trading months of the year, for now, the sound of success is expected to continue.

Chris Versace explains why US stocks are surging

CGTN’S Rachelle Akuffo spoke to Chris Versace, chief investment officer for Tematica Research, about the surging U.S. stock market and the factors behind it.