First time in after two months the Dow Jones Industrial average went above 25,000. Dow Jones average posted 435 point gain in a massive one day rally and charted a market breakout attempt against stiff resistance.
The rally followed mixed results in U.S. equities markets with the S&P 500 and NASDAQ in the red for the day by a troubling 0.15 percent and 0.81 percent declines, respectively. The Dow was only barely in the green with a 51point gain.
When considering for the day, there seems to be a general updraft in U.S. equities with the S&P 500 up by 1.55 percent and the NASDAQ up by 1.03 percent.
Bitcoin also seems to be having a good day. Bitcoin value was more than USD$30 per bitcoin to $3,432.29 at the time trading stopped on the New York Stock Exchange.
REASON FOR THE DOW JONES RALL
Analysts pointed towards the renewed hopes for trade negotiation talks with China, Strong fourth quarter in 2018 earnings reports from Boeing, Apple, and McDonald’s; and a positive outlook from a meeting of the Federal Open Market Committee, along with the announcement that interest rates are expected to remain stable for the time being.
Below is a look at each of these factors separately in the decreasing order of relevance to the Dow Jones Industrial average’s bull run:
1. FEDERAL RESERVE HOLDS RATES STEADY
But the real mega force behind the sharp rise in value for the U.S. equities and Dow Jones Industrial Average on Wednesday was the rosy outlook of the Federal Reserve Open Market Committee in the meeting that took place today and its announcement that interest rates will remain more or less stable.
2.MCDONALD’S, APPLE, AND BOEING EARNINGS
Knowing that two of the most significant world economic powers come together is promising, but it can hardly be trusted. If they don’t reach an agreement before the deadline, the United States will implement tariffs on $200 billion worth of Chinese imports. But the strong earnings of last three quarter’s of the Dow’s 30 blue chip stocks are claimed to be very definite.
Boeing stock rose Wednesday like a jet taking off with its flaps down, gaining an over 6 percent over the trading session after the aeronautics and arms manufacturer reported revenues for the fourth-quarter which increased far above expectations.
McDonald’s Wednesday report of fourth-quarter profits also beat the expectations with 103 percent growth in earnings. The fourth quarter high margins by lower operating expenses and taxes for the fast food giant.
Apple Inc. shares were a major driver for the Dow rally Wednesday, rising close to 7%. The news of better than expected fourth quarter earnings as Apple guides toward a steady March
3. CHINA TRADE NEGOTIATION HOPES
The announcements made by Federal Reserve’s on Wednesday were the most explicit driving force behind the Dow rally. Most analysts, however, have said that China in passing, suggesting that markets may have been buoyed in part due to renewed hopes as many investors await a resolution to China and United States trade negotiations.
Top officials from the Chinese and United States government sat down in the Eisenhower Executive Office Building for two days for talking about trade negotiate. Putting an end to months of trade wars that have been costed companies in both economies billions of dollars in lost business. It is said that both China and the United States is aiming for a March 2 as a deadline to reach an agreement.