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Updated 26 minutes ago
Meet Wall Street's new $20 trillion-dollar man: Mr. Market.
Mr. Market is the nickname for the benchmark Standard & Poor's 500 stock index. In Monday trading, the large-company stock gauge not only hit another fresh high, but it also hit a record market value of $20.03 trillion, up from $5.9 trillion back at the market's last major low on March 9, 2009, according to data from S&P Dow Jones Indices. The S&P 500 jumped 12.15 points to close at 2328.25.
The market value, or capitalization, of the S&P 500 is derived by adding up the market values of all 500 companies in the index. Heading into this week Apple ranked No. 1 in S&P 500 market value at $710.7 billion, followed by software giant Microsoft at $503.2 billion.
The rally marked a continuation of a sharp rise in stock prices since Donald Trump was elected president Nov. 8. Wall Street has been in risk-taking mode as investors bet that Trump's promised moves to lower income taxes for corporations and other policies deemed positive for economic growth will warrant higher stock prices.
“Day after day, corporate executives from a variety of industries are being brought to the White House to consult with the president. Business does seem to be back in the driver's seat, and I think that's why people are willing to pay up a little bit more for stocks,” said Jamie Cox, managing partner of Harris Financial Group in Richmond, Va.
The S&P 500's rise in value above $20 trillion for the first time comes on a day when every corner of the U.S. stock market was in rally mode. The blue-chip Dow Jones industrial average, the technology-packed Nasdaq composite, and small-company Russell 2000 indexes, notched record closing highs Monday. The Dow Jones industrial average gained 142.79, or 0.7 percent, to 20,412.16. The Nasdaq composite climbed 29.83, or 0.5 percent, to 5,763.96.
“First, the earnings season is coming in with a slate of upside surprises, especially among growth stocks” like online retailer Amazon.com and Apple, says David Rosenberg, chief economist and strategist at Canadian-based investment firm Gluskin Sheff. The S&P 500's fourth-quarter 2016 earnings growth rate is now 8.4 percent, on pace for its best quarter since the third quarter of 2014, according to earnings tracker Thomson Reuters I/B/E/S.
Second, says Rosenberg, is news that the deal to cut oil-production agreed to by members of OPEC is holding, which is keeping the price of U.S.-produced crude in the mid-$50 per barrel range. Crude fell 1.8 percent Monday to around $53 per barrel. The final piece of the puzzle, according to Rosenberg, are signs that President Trump is dialing down some of his more controversial foreign policy views. “Trump has shown some impressive flexibility lately,” Rosenberg told clients.
Still, despite the market hitting new highs, there's a healthy mix of trepidation to go along with the optimism, says Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.
“The tick (the market) is up, but so is nervousness,” Silverblatt said. “The current saying is ‘things could change on a tweet.'”
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