Stocks retreated during the early hours of the trading session Thursday, but one expert says all signs still point higher in the market even after the Dow Jones Industrial Average closed above the 23,000 milestone for the first time on Wednesday.
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“While recognizing that valuations in the U.S. are not cheap at 17.5 [times] forward earnings and that we have not had a market correction in over one year, we still believe that economic and earnings strength will propel the markets to new highs,” Tara Hedlund, CFA, CPA and senior vice president at wealth management firm Pennsylvania Trust, told FOX Business.
Hedlund noted that record closes on the Dow, Nasdaq, S&P 500 and the Dow Jones Transportation Average in October signal the extensive strength of the market run. This rally, she said, reflects a bevy of positive economic data including solid GDP growth, consumer sentiment, retail sales and earnings growth, along with low unemployment.
The Dow has notched four new 1,000 point milestones so far this year alone, along with 51 record closes. On Tuesday, just 53 days after the Dow surpassed 22,000 for the first time, the blue-chip index crossed the 23,000 level during the trading session, boosted over the mark by a few notable stocks including Boeing (NYSE:BA), Caterpillar (NYSE:CAT) and Home Depot (NYSE:HD).
As the Dow reaches yet another new psychological milestone, some investors are worried the bull market might be overdone. However, it’s not just U.S. headwinds propelling stocks higher.
“We are in the midst of a synchronized global economic expansion,” Hedlund said, pointing to Japan’s second quarter GDP growth of 4.0% and economic strength in Eurozone countries over the same time period.
All three major indices opened Thursday’s trading session lower. However, since Election Day, the Dow has recorded 68 record closes, the S&P 55 and the Nasdaq 67.