The Dow Taps Fresh Record-Highs, Disney Leads Gains

The Dow Jones Industrial Average tapped new record-highs yesterday at 28,040.70 before it finished another day in the green at 28,036.20. The index was up 31.3 points or 0.11% from Friday’s trading.

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News that US President Donald Trump’s meeting with Federal Reserve Chairman Jerome Powell was “good & cordial” helped equities trade steadily higher. This sentiment from Trump was not what investors are used to. In the past, he has described Powell as an “enemy” of America following the Federal Reserve’s decision to keep rates steady.

There was also an announcement that Huawei can continue doing business with US companies. The Chinese mobile company was granted a 90-day extension as the government finalizes regulations on telecommunication firms.

Biggest Gainers

Disney led the rally in stocks when it rose a new all-time high at $148.89, before closing the day with a $2.98 or 2.06% gain at $147.65 from Friday. The stock’s gains were sparked by news that its streaming service received over 10 million subscriptions a day after it was launched.

UnitedHealth and Nike came in second and third with 1.31% and 1.23% upticks, respectively.

For this week, eyes are on some of the biggest retailers in the US. Home Depot Inc, Kohl’s Corp, and Target Corp. are slated to release their earnings reports.

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Problems on the horizon?

However, analysts warn that the Dow may soon pare some of its gains. The most recent news out of Beijing is that trade talks are beginning to turn sour. A report from CNBC revealed that reluctance from the Trump administration to roll back tariffs on Chinese goods could prevent a deal from happening anytime soon.

There are also concerns about US President Trump testifying in impeachment hearings after House Speaker Nancy Pelosi offered him the “opportunity to present his case.” This could be a cause for concern for market participants. Trump could easily go off-script and his remarks could affect trade war negotiations or the impeachment.

Negative developments pertaining to these events could dampen risk appetite and push the Down back down to previous highs around 27,780.

Alternatively, improvements in the US-China trade negotiations and confirmation from the White House that Trump will not testify can fuel risk appetite.Download our latest quarterly market outlook for our longer-term trade ideas.

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