Dow 20,000? Don’t hold your breath.
Wall Street analysts are cooling to the prospect of the blue-chip stock index breaking through the 20,000 mark by the end of the year — as optimism over President-elect Donald Trump’s effect on markets wanes, the amount of economic information dwindles, and terrorism dominates international headlines.
The Dow Jones industrial average fell for the second day in a row on Thursday to close at 19,918.88 — a turnaround that was practically unthinkable to investors on Tuesday when the index hit its new all-time high of 19,974.96.
The Dow has marked an 8.9 percent climb since Election Day, and it’s up 14.3 percent for the year.
CNBC hyped the Dow’s level all week. Stock traders and Wall Street Journal reporters alike were photographed wearing Dow 20,000 hats.
But 44 days after the start of the Trump rally, optimism is in short supply and analysts are starting to question when the Trump administration will detail the extent of its spending, tax-cutting and stimulus policies.
“We’re running on a dream, the Trump dream, that he’s going to stoke the fires of growth and tax cuts and double GDP,” Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi, told The Post.
“We’re moving on all talk, but we need to see some action,” he added.
With five trading days left in the year, there’s little economic information that could prod the market to rise above 20,000, Quincy Krosby, strategist at Prudential Financial, said.
Next week, data on home prices, jobless claims, and manufacturing output, all of which are important enough to move the market, are expected to be published.
And then you have the holidays — so there are fewer Wall Streeters out there who will be pushing the market up higher.
“Many managers have locked in their gains for the year, and they’re going to hold steady,” Krosby said.
With fewer traders showing up to work, any negative news — especially related to terrorism — could hit markets harder than they would have otherwise, she said.
One problem with 20,000 is that it’s a psychological threshold, and tepid traders don’t want to cross that line unless it’s justified — for fear that their trades will fall back to earth.
“A lot of times, we get up close to it, and then fall back, wait for more news, a better day to go through,” Rupkey said.
“The market has priced in a game-change,” Krosby said. “Now we’re going to have to see that the game has, in fact, been changed.”