The Dow surpassed 26,000 for the first time Tuesday, though Wall Street pulled back in the final hours of trading.
The Dow Jones Industrial Average closed 10 points lower at 25,792. The S&P 500 slipped 9 points to 2,776. The Nasdaq Composite dropped 37 points to 7,223.
It took a mere seven sessions for the Dow to jump from 25,000 to 26,000, marking the fastest 1,000-point rally in the blue-chip index’s history. Robust corporate earnings and optimism over economic policies, mainly the $1.5 trillion tax-cut package, have helped drive stocks higher in 2018.
“We won’t see who the true winners and losers of tax reform are for another couple of quarters. However, we are getting to Dow 26,000 because investors are treating every company like a winner,” said Alexandra Coupe, associate director for PAAMCO.
Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, also said fiscal stimulus and improved corporate earnings are serving as tailwinds. However, the market’s rapid rise may give pause to investors.
“The speed at which the market has moved higher these past two weeks is unsettling, and the risk of overheating this year is rising,” Zaccarelli said, adding that a meaningful pullback later this year wouldn’t be surprising.
UnitedHealth (NYSE:UNH) and Merck (NYSE:MRK) contributed to the Dow’s early gains on its way to 26,000 on Tuesday. UnitedHealth topped estimates for fourth-quarter earnings and raised its outlook for 2018, citing federal tax reform. Merck surged 5.8% after a trial study showed that one of its drugs, Keytruda, combined with two chemotherapy medicines, was successful in treating lung cancer.
General Electric (NYSE:GE) was down 2.9% following comments from CEO John Flannery, who said the industrial conglomerate is considering a breakup.