The three major stock market indexes hit record highs in early trading on Tuesday, with the Dow getting even closer to the 20,000 milestone.
The Dow closed at its 15th all-time high since the election on Monday. Stocks extended the so-called Trump rally that was triggered by expectations that the next administration will enact pro-business policies like lighter regulation and tax cuts.
Shortly after the open, at 9:32 a.m. ET, The Dow was up 70 points, or 0.36%, at 19,867.16. The S&P 500 gained 8 points (0.36%) to 2,265.35, while the Nasdaq was up 20 points (0.38%).
“We believe that the Trump Rally will continue as long as (1) the economy continues to reflate, and (2) the market views higher inflation expectations and rates positively,” said Jonathan Golun, RBC Capital Market’s chief market strategist, in a note on Tuesday. “Inflation expectations and interest rates bottomed in July and have inflected higher since the election. A tight labour market and an increase in consumer and business optimism should fuel this trend higher. We see this as an important pre-condition for further stock upside.”
Still, there are concerns about the fact that valuations are stretched, according to Golub. On Saturday, billionaire investor Carl Icahn told CNN that the Trump rally had gone too far.
Crude oil was little changed in early trading on Tuesday following a massive leap to start the week. The gains were driven by an agreement from non-OPEC crude producers — including Russia — to cut production levels by 558,000 barrels per day, or around 0.6% of global supply, next year, following the 1.2 million barrels per day reduction announced by OPEC at the group’s November 30 meeting.
The January futures contract for West Texas Intermediate crude oil, the benchmark of US prices, was down 0.40% to $52.60 per barrel.