The Dow, which tracks the largest publicly owned companies in the US, finally breaks record after a sudden rise in the past month

The Dow Jones industrial average finally broke through the 20,000 barrier on Wednesday morning – a historic high for the leading stock market index and one it has been close to breaching since Christmas.

The Dow, which first nearly topped 20,000 on 13 December and again on 6 January, when it came within 0.37 points of the landmark, finally broke through after the opening bell was rung on Wall Street by Ashton Poole, CEO of lender Triangle Capital. When the closing bell was rung by executives from InBev, brewers of Stella Artois, traders whooped and cheered a new milestone in the index, which closed at a record high of 20,068.

The market had rallied sharply in the wake of Donald Trump’s presidential victory but seemed to lose steam ahead of his first day in office. It broke the barrier on Wednesday morning after infrastructure stocks rose sharply ahead of the market’s opening, boosted by Trump’s renewed pledge to build a wall along the Mexican border and talks of massive infrastructure investment. A rise in Boeing’s shares, which reported better than expected results on Wednesday, and the continued rally in the financial sector that has accompanied Trump’s win also helped push the Dow over the line.

The Dow record comes as the S&P 500 index, tech-heavy Nasdaq and London’s FTSE 100 stock market index have all hit record highs in recent weeks.



The Dow, which has risen about 9% since Trump’s victory, is probably the best-known US stock indicator although its limited measure is not the one favoured by most market professionals. It measures the performance of 30 of the largest publicly owned companies based in the United States, including Apple, ExxonMobil and Goldman Sachs. While it has inched over the 20,000 mark, overall its latest rise has been sudden. The Dow surpassed 19,000 for the first time just 42 days ago – two days before the Thanksgiving holiday and has risen 5.6% since then. Similar sharp rises in the index have been followed by sharp falls.

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The last time the Dow added 1,000 points so quickly was in May 1999. The index passed 10,000 in that same year, the height of the dotcom bubble, only to lose much of those gains in the coming crash. But market watchers said they believed this rally was on a more solid footing.

The recent rapid rise has been driven in part by expectations that Trump will introduce policies that will boost growth and cut regulatory pressures on US companies. Trump has pledged to roll back the Dodd-Frank regulations brought in to more tightly control financial institutions in the wake of the 2008 financial meltdown. Banks and other financial companies have been among the biggest beneficiaries of the recent share-price rise.

But the rise comes against a strong upward trend in the Dow that stretches back to the end of the recession in 2009 and the decision of the Federal Reserve to slash interest rates, making shares a more attractive investment.

Few on Wall Street seemed overexcited by the news. When the Dow hit 10,000, Richard Grasso, then chairman of the New York stock exchange, closed the day’s trading with Rudy Giuliani, New York’s mayor. They threw “Dow 10,000” caps to a cheering crowd of traders.

The reaction was more muted this time, in part because so much trading has moved online since 1999 and also because the new level comes after an eight-year run of rises.

Scott Wren, senior global equity strategist for Wells Fargo Investment Institute, said given the overall health of the US economy he would have expected a broadly similar rise had Hillary Clinton won the election. Any changes to regulation Trump has planned could take years to pass and implement, he said, and investors were more interested in shorter-term trends. “I would hesitate to call it a Trump rally,” he said. “I’d say 80% of where we are now is down to fundamentals and probably another 20% is post-election enthusiasm.”

Jack Ablin, chief investment officer of BMO Financial Group, called the news “psychologically important” but said it was unlikely to set a new benchmark for the index, and that the Dow would probably dip above and below the 20,000 level for some time.

“The surge in financials is probably one of the biggest fuel sources for this rise,” said Ablin. “It’s hard to know if it’s sustainable; there is a lot of expectation not only that these new policies will be passed but also that they will work.”

Facebook Twitter Pinterest Richard Grasso and Rudy Giuliani, right, celebrate the Dow passing 10,000 for the first time in 1999. Photograph: Henny Ray Abrams/AFP/Getty Images

Rapid rises in the Dow have been followed by equally rapid falls. The Dow peaked at 11,722.98 in January 2000. After the dotcom bubble burst it took more than seven years for the Dow to hit its next milestone of 12,000, in October 2006.

The Dow topped 14,000 in July 2007 – the height of the housing bubble and less than three months after passing 13,000. After the crash it took the Dow six years to return to that level.

But Wren predicted 2017 would be a relatively stable year for US stock markets. “I don’t think 20,000 is a sign of overenthusiasm or froth,” said Wren.

The Dow hit its record high after a new poll showed consumer confidence surged in December. The Conference Board’s consumer confidence index rose to 113.7, up from 109.4 in November. Its “expectations index”, which measures consumers’ confidence about the future, increased sharply from 94.4 to 105.5, a 13-year high. Older consumers, however, were markedly more optimistic than younger ones.

“The post-election surge in optimism for the economy, jobs and income prospects, as well as for stock prices, which reached a 13-year high, was most pronounced among older consumers,” said Lynn Franco, director of economic indicators at the Conference Board. “Looking ahead to 2017, consumers’ continued optimism will depend on whether or not their expectations are realized.”

