For all those skeptics who rushed to take their money out of the stock markets and into other investment vehicles over the last 18 months, here’s some good news: The Dow Jones Index closed above 18,000 on Monday for the first time since July 2015.
The 100-point jump should make investors somewhat relieved considering that the Dow plunged to just 15,451 back in January when Wall Street reacted in a panic over the crash in oil prices and the economic slowdown in China.
The Dow is now up 16.5% from its 2016 low, and is nearing its all-time record high of 18,351 set last May. The S&P 500 also closed at a record 2016 high on Monday and the Nasdaq is close to reaching a crucial level, down just 1% on the year. That's an impressive number considering the fact that the Nasdaq was on the verge of entering a bear market back in February.
Analysts were somewhat surprised with Wall Street’s numbers. The disappointing results of the recent G20 meeting in Doha, with global producers including Russia and Saudi Arabia failing to reach an agreement to freeze output in an effort to ease the global glut, sent oil prices plunging 6% on Sunday putting pressure on U.S. stock futures.
U.S. crude oil futures followed suit, settling down 58 cents, or 1.4 percent, at $39.78 a barrel continuing a four-day losing streak, the first since late March. There was some good news, however, for the short term, as Kuwait announced a significant cut in oil production as a result of a strike by oil workers in the country. In addition, unofficial news out of the country reported that Kuwait Oil Company had cut crude output to 1.1 million barrels per day from its normal production level of about 3 million barrels a day.
Energy Stocks Strong
Energy stocks helped push Wall Street higher, with several major oil companies jumping more than 4%, which helped oil to bounce back and close down less than 2%.The climb on Monday brings the blue-chip average’s year-to-date advance to 3.3 per cent. The index had traded as low as 15,450.6 in January as concerns over China’s economy and the battered energy sector pushed oil prices to rock bottom levels.
Analysts question whether crossing the 18,000 milestone is an indication of a renewed bull market. According to some, such as JPMorgan’s Jason Hunter, the S&P 500 may be running out of short term momentum but the longer term forecast is more positive.