Investor confidence was high in the disrupted week of trading before the Independence Day holiday. Following one of the best June results in decades, the stock market closed on Wednesday with all major indexes in the green.
NASDAQ, Dow, and S&P 500 are Growing
The three major benchmark indexes closed at record numbers on Wednesday.
- The S&P 500, which tracks the largest cap stocks in America, had its third record day of closing, finishing with a gain of 0.8%.
- The Dow Jones Industrial Average had its first record closing since October 2018. It closed with a 0.7% gain.
- The NASDAQ Composite finished with a similar gain, closing 0.8% higher than the previous day. This was a new record for the index, beating the previous high set in May of this year.
Trading hours were shortened on Wednesday, with markets closing at 1PM Eastern Time. Markets will be closed today and will reopen on Friday for regular trading hours.
What’s Driving Stock Market Indexes Growth?
President Trump announced at the G20 summit last weekend that he would end the tariff standoff with China, and that negotiations for a long term trade deal would resume. Both countries will keep existing tariffs in place, but no new ones will be introduced for as long as negotiations are productive.
This ended months of drawn out tit-for-tat tariffs that have fatigued the stock market.
International monetary policies have also boosted investor confidence. Lower interest rates have made corporate borrowing more affordable. This could lead to more investment and growth for the world’s largest companies. Market analysts expect that loose monetary policies will help to sustain the economic expansion, even as it slows down compared to levels in recent years.
Trump’s new Federal Reserve nominees have also been popular with investors. Both nominees are supportive of interest rate cuts, which is exactly what investors are looking for today.
Will Record Performance Continue?
Nothing is ever certain in the stock market, but most investors would agree that equities are currently in good shape. The rally in 2019 has created excellent returns, and at least for the time being, it looks set to continue.
Diversification and smart stock buys will help to protect portfolios while leveraging the gains that have persisted in recent months.
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