The Dow is getting closer to 20,000

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Markets Insider

The three major stock market indexes hit record highs in trading on Tuesday, with the Dow getting even closer to the 20,000 milestone.

The Dow closed at its 15th all-time high since the election on Monday. Stocks extended the so-called Trump rally that was triggered by expectations that the next administration will enact pro-business policies like lighter regulation and tax cuts.

At 1:24 p.m. ET, the Dow was up 149 points (0.76%) to 19,946.17. The S&P 500 was up 20 points (0.91%), while the Nasdaq was up 72 points (1.34%.)

The Dow will log its fastest 1,000-point rally ever if its closes above 20,000 within the next 17 days. The quickest move – from 10,000 to 11,000 – took just 35 days at the height of the tech bubble in 1999. Tuesday was day 18 since 19,000.

The Federal Reserve is expected to announce an interest-rate hike on Wednesday after its two-day meeting.

“We believe that the TrumpRally will continue as long as (1) the economy continues to reflate, and (2) the market views higher inflation expectations and rates positively,” said Jonathan Golub, RBC Capital Market’s chief market strategist, in a note on Tuesday. “Inflation expectations and interest rates bottomed in July and have inflected higher since the election. A tight labor market and an increase in consumer and business optimism should fuel this trend higher. We see this as an important pre-condition for further stock upside.”

Still, there are concerns about the fact that valuations are stretched, according to Golub. On Saturday, billionaire investor Carl Icahn told CNN that the Trump rally had gone too far.

Crude oil added to its massive leap at the start of the week. The gains since Sunday have been driven by an agreement from non-OPEC crude producers – including Russia – to cut production levels by 558,000 barrels per day, or around 0.6% of global supply, next year, following the 1.2 million barrels per day reduction announced by OPEC at the group’s November 30 meeting.

The January futures contract for West Texas Intermediate crude oil, the benchmark of US prices, was up 0.44% to $53.07 per barrel.