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Dow closes over 19,000 for the first time

Trader Peter Tuchman wears his "Dow 19,000" cap

Trader Peter Tuchman wears his "Dow 19,000" cap on the floor of the New York Stock Exchange, Monday, Nov. 21, 2016. Credit: AP / Richard Drew

The Dow Jones industrial average broke through 19,000 for the first time Tuesday, joining other major stock indexes that set records in a postelection rally.

The 30-stock Dow climbed 0.4 percent to close at 19,023.87 — up 3.8 percent since Election Day — while the Standard & Poor’s 500 index gained 0.2 percent to close at 2,202.94, that index’s first close above 2,200. The Nasdaq composite added 0.3 percent to reach 5,386.35, a record close as well.

The Russell 2000 index, which tracks smaller companies, was especially strong, jumping 0.9 percent to close at a record 1334.34.

Tuesday’s close for the Dow was its sixth all-time high since President-elect Donald Trump defeated Hillary Clinton on Nov. 8.

The rally has been powered by forecasts for “tremendous government stimulus” by the incoming Trump administration, said Michael Kresh, owner and chief investment officer at Islandia-based Creative Wealth Management.

Investors expect deregulation, lower taxes and infrastructure spending on roads, hospitals and schools to boost earnings and the economy. And the Trump administration is expected to offer incentives to multinational companies such as Google and Cisco Systems to repatriate billions of dollars in profits held overseas, Kresh said.

Defense, industrial and financial services companies have led the postelection rally, while utility, communications and consumer staple stocks have lagged, said Mitchell Goldberg, president of Melville-based ClientFirst Strategy.

Shares of Melville-based defense contractor Comtech Telecommunications Corp. rose 10 cents Tuesday to close at $11.57, a gain of 20 percent from their closing price of $9.62 on Election Day.

The “Trump trade” stocks are unlikely to remain unchallenged as stock sectors rotate — a normal phenomenon in the market, Goldberg said.

“It’s like a relay race,” Goldberg said. “The baton is being passed.”

Kresh said a flip side of the stock-market rally has been a sharp decline in the bond market that has cost global investors more than $1 trillion.

An improving economy and the prospect of government borrowing to finance infrastructure spending are among the factors pushing up interest rates, analysts have said. As interest rates climb, the value of bonds paying lower rates — and the value of bond funds holding such securities — declines.

Kresh said higher interest rates also will drive up home mortgage costs, which could eventually take a toll on the real estate market on Long Island and elsewhere, as fewer prospective buyers qualify for mortgages.

On Tuesday, health care stocks slumped after weak results from Medtronic, one of the world’s largest medical device makers.

Retailers soared after strong earnings from Dollar Tree and Burlington Stores.

“The consumer in general is far more budget-conscious than they were in previous generations,” Ken Perkins, president of research firm Retail Metrics, said of discount chains.

Also Tuesday, benchmark U.S. crude lost 21 cents to $48.03 a barrel in New York. Energy company shares fell.

The yield on the two-year Treasury note rose to 1.09 percent, its highest in six years. The yield on the 10-year Treasury note rose to 2.32 percent from 2.31 percent.

The U.S. exchanges will be closed Thursday for Thanksgiving and will close early on Friday.

With AP

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