top of page
Lanon Wee

Why the Dow is on Its Longest Winning Streak Since 2017

The Dow Jones Industrial Average has been making historic gains lately. It rose for 12 consecutive days, approaching the 13-day streak seen in 1987. Over the course of this streak, the Dow has skyrocketed by 6%. The S&P 500 and Nasdaq, however, have increased by just 3%. These indexes have experienced losses twice and three times, respectively, over the same period.Several factors are likely playing a role in this impressive streak, chief among them being a decrease in recession worries. No one knows how long will the Dow's winning streak will continue, however, if the current conditions hold, the rally is likely to go on. Steve Eisman, a senior portfolio manager at Neuberger Berman, spoke to CNBC's "Squawk Box" recently and stated that since there is no evidence of a recession, the market will likely continue to increase as investors chase stocks. Eisman, who attained notoriety for taking advantage of the subprime mortgage crisis, was featured in Michael Lewis' book "The Big Short".Data showing a decrease in inflation has had a strong contribution to the reduction of recession fears. The consumer price index (which records prices on various items like food and electronics) was up by a mere 3% for the year, and the producer price index (which tracks manufacturer costs for raw goods) rose 0.1% in June from the previous month, both figures were lower than what analysts anticipated.Moreover, employment numbers suggest a steady economy, with recent jobless claims data denoting a decline. Dow stocks, that are linked to a thriving economy (such as American Express, Chevron, Coca-Cola, and 3M), are the major beneficiaries of positive economic figures and low inflation. The current market situation suggests that the rally will keep going, however its longevity is unknown. The Dow is getting an increase, with many of its 30 members publishing excellent quarterly reports. Boeing's stock spiked 7% on Wednesday with the aerospace company announcing a lower-than-expected loss, revenue more than what experts predicted and they also said they released 136 planes in the second quarter, which is 5 more than the year prior. Coca-Cola went up 1% when they presented a more optimistic view for the full year and earnings higher than expected, attributing the positive change to the withdrawing of energy prices from their peak and an emphasis being put on the calming of banking sector worries. Additionally, 3M recently announced numbers surpassing analyst expectations and it caused a 5% jump in share prices.Furthermore, the distinct mechanics of the Dow are also credited for its ascent. The average is price weighted instead of market cap weighted, so the brands with higher prices hold more importance. Goldman Sachs and UnitedHealth, both having the highest price points, have seen an uptick of 10% and 6%, respectively.Finally, if the Dow increments the next two days, it will meet the record-breaking 14 day streak from 1897, when the index first began.

Comentários


bottom of page