All three benchmark U.S. stock indexes scored record highs again Thursday, unfazed by President Donald Trump’s impeachment, while finding ongoing support from the U.S.-China trade deal, the passage of the USMCA trade deal to replace NAFTA by the House, and improving economic data.
What are stock indexes doing?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -4.06% rose 137.68 points, or 0.5%, to a record 28,376.9 close, while the S&P 500 index /zigman2/quotes/210599714/realtime SPX -3.37% gained 14.23 points, or 0.5%, at 3,205.37, its all-time high. The Nasdaq Composite index /zigman2/quotes/210598365/realtime COMP -3.79% added 59.48 points, a gain of 0.7%, at 8,887.22, extending its seventh-day winning streak and setting another record.
Year-to-date the Dow is now up 21.65%, the S&P 500 index up 27.86% and the Nasdaq up 33.94%.
On Wednesday, the Dow and S&P 500 snapped a five-day winning streak to end slightly lower. The Dow ended with a loss of 27.88 points, or 0.1%, at 28,239.28, while the S&P 500 gave up 1.38 points, or less than 0.1%, to end at 3,191.14. The Nasdaq Composite held onto a small gain to eke out its fifth-straight record close at 8,827.73, a gain of 4.38 points, or less than 0.1%.
What’s driving the market
While the vote to impeach Trump by the Democratic party controlled House dominated headlines, investors have largely brushed off the proceedings, analysts said. Expectations the Republican-controlled Senate will vote against removing Trump from office have insulated the market against any concerns.
“The market is suggesting right now that it’s meaningless,” said Kent Engelke, chief economic strategist at Capitol Securities Management, of Trump’s impeachment. “Right now, it's all about trade, economic activity and the yield curve at its steepest it’s been for all of 2019. That’s an indicator of greater economic activity in the interim.”
Meanwhile the market remains heartened by the truce in the U.S. - China trade war after last week’s agreement, while recent economic data has tentatively soothed worries over global economic growth.
The Chinese Ministry of Commerce said Thursday that it remains in contact with the U.S. as the text of the deal is drafted, according to Reuters, though it has declined to confirm claims by the Trump Administration that it will involve $32 billion of agricultural purchases beyond the $24 billion of purchases made by the Chinese in 2017, before the trade spat began.
U.S. Treasury Secretary Steven Mnuchin said the deal will be signed in early January, telling CNBC Thursday morning that the deal “is just going through what I would consider to be a technical legal scrub.”
As the market closed, the U.S. House also passed a bill to replace the North American Free Trade Agreement (NAFTA) with the USMCA and is likely to be passed by the Senate in the new year.
Compared to NAFTA, the new treaty aims to help U.S. farmers, ranchers, manufacturers, workers and consumers by opening new markets to American goods and reducing the cost of household staples such as drugs and groceries. It would also shield U.S. industries like autos and steel from what the Trump White House saw as unfair competition.