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Chart of the Day / Dow 30,000: Why it’s a Strong Possibility in 2018

Dow 30,000: Why it’s a Strong Possibility in 2018

August 27, 2018

The bull market is alive and well.

Since January 2016, the Dow Jones Industrials rallied from 15,450 to 25,790.

The NASDAQ soared from 4,350 to all-time highs of 7,945. The S&P 500 jumped from 1,850 to 2,874.  The Russell 2000 rocketed from 943 to 1,725.

And there are no signs that the bull market will break down any time soon.

In fact, quite the contrary.  At this point, we wouldn’t be shocked to see Dow 30,000 this year.

All thanks to economic strength, led by a strong consumer, low unemployment, and considerably strong U.S. GDP, which could approach 5%.

The Federal Reserve Deserves Credit, too

Part of the reason the markets shot higher last week was because of a dovish Fed.

At a Jackson Hole, Wyoming presentation, Fed Chair Jerome Powell noted just how strong the economy is.  He also noted he doesn’t see much risk of economic “overheating,” as far as inflation is concerned.  He also continues to support the Fed’s gradual rate hike policy.

“The economy is strong,” Powell said. “Inflation is near our 2 percent objective, and most people who want a job are finding one. My colleagues and I are carefully monitoring incoming data, and we are setting policy to do what monetary policy can do to support continued growth, a strong labor market, and inflation near 2 percent.”

The chairman’s dovish tone about the economy and his message that the Fed plans to stick with a gradual pace of rate hikes helped spark last week’s rally.

“With solid household and business confidence, healthy levels of job creation, rising incomes, and fiscal stimulus arriving, there is good reason to expect that this strong performance will continue,” he said.

Clearly, the market likes what it heard.  At this pace, given economic strength and overwhelming bullishness, Dow 30,000 may not be long off.