Wall Street making fresh record highs, how sustainable is this rally?
|The Trump rally has continued mid-week on Wednesday and we are into further record territory.
The Dow Jones Industrial Average DJIA, +1.55% meanwhile, set another all-time high of 19,558.42 and finished at 19,549.62, registering its third-straight record close in a row.
The S&P 500 index also made a record high of 2,241.63 and made a closing high of 2,241.35, after opening in negative territory. The Nasdaq Composite rose 60.76 points, or 1.1%, to 5,393.76 and finished just a few points below its all-time high. Meanwhile, the Russell 2000, the small-cap index, advanced 12.62 points, or 0.9%, to 1,365.30.
Interest rates:
US 10yr treasury yields fell from 2.40% to 2.34%, and 2yr yields fell from 1.12% to 1.10%. Fed funds futures continue to imply a 100% chance of a rate hike on 14 December, with two more rate hikes priced in for 2017.
How sustainable is this rally?
This is comes in the wake of a new president elect, Trump, and prospects of reflation in the US economy with markets moving out of bonds and into risk-on asset classes and stocks. However, the rise in the US dollar could be a concern for US multinationals and you have to wonder where Trum will raise all of the funds that he intends for the government to spend during his term. The Fed will indeed have a hard time keeping ahead of the curve sustainably by raising interest rates without rocking the apple cart.
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