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1 week ago

News Source: cnbc.com
Dow Hits Record High; Reaches 27,000 For First Time Ever
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Dow Jumps 160 Points To Break Above 27,000 For The First Time Ever

The Dow Jones Industrial Average rallied to a record high on Thursday, led by UnitedHealth shares, after testimony by Federal Reserve Chair Jerome Powell this week that signaled easier monetary policy could be implemented later this month.

The 30-stock average broke above 27,000 for the first time in its history, rising 168 points or 0.6%. The Dow first closed above 26,000 in January of 2018 so it's been a little more than a year-and-half trek between 1,000 point moves, with the gains largely driven by expectations the Fed will cut rates, insulating the market from a slowing economy and a trade battle with China.

Microsoft has been the best-performing Dow stock since the index's first close above 26,000, surging around 50% in that time. Visa, Cisco Systems and Nike are also up sharply since then. 

"This week solidified the fact that the market doesn't need, it doesn't want, it's demanding a rate cut from Powell," said Jeff Kilburg, CEO of KKM Financial. "I do have a little bit of caution going into the earnings season because we have some forward-guidance uncertainty with the trade tensions, but the wind in the sails continues to be that dovish stance from Powell."

The S&P 500 traded just above the flatline on Thursday and briefly broke back above 3,000 while the Nasdaq Composite slipped 0.2%. The S&P 500 first broke above 3,000 on Wednesday.

UnitedHealth shares surged more than 5% after the White House dropped a proposal to eliminate drug rebates. CVS Health and Cigna also jumped on the news, gaining 4.3% and 8%, respectively.

In testimony to the House Financial Services Committee on Wednesday, Powell said business investments across the U.S. have slowed "notably" recently as uncertainties over the economic outlook linger. As a result, expectations of an upcoming rate cut grew.

"Crosscurrents have reemerged," Powell said. "Many FOMC participants saw that the case for a somewhat more accommodative monetary policy had strengthened. Since then, based on incoming data and other developments, it appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook."

Powell reiterated that testimony on Thursday. Market expectations for a rate cut later this month are at 100%, according to the CME Group's FedWatch tool.

Thursday's milestone was only the latest in the longest bull market in history. The bull run started in March of 2009 after the financial crisis. Back then, the Dow was trading around 6,600 points while the S&P 500 hovered below 1,000 points. 

"Sure, 27,000 is just a number and in the whole scope of things isn't meaningful," said Ryan Detrick, senior market strategist at LPL Financial. "What it is though, is a reminder for all investors that this bull market has ignored all the scary headlines for years and the dual benefit of fiscal and monetary policy could mean it has a lot longer to go than most expect."

In economic news, the U.S. consumer price index — a widely followed measure of inflation — rose more than expected last month, with the core CPI posting its biggest gain in 1½ years. But that failed to dent investors' expectations that the Fed will deliver a rate cut.