NEW YORK—The Dow Jones industrial average burst through the 25,000 point mark yesterday, just five weeks after its first close above 24,000.
The Dow passed five 1,000-point barriers in 2017 on its way to a 25 percent gain for the year as an eight-year rally since the Great Recession continued to confound skeptics.
Strong global economic growth and good prospects for higher company earnings have analysts predicting more gains, although the market may not stay as calm as it has been recently.
The Dow has made a rapid trip from 24,000 points on Nov. 30, partly on enthusiasm over passage of the Republican-backed tax package, which could boost company profits this year with across-the-board cuts to corporate taxes.
“For a long while in 2017, I would say the biggest driver was excitement and anticipation over tax reform,” said Invesco Chief Global Markets Strategist Kristina Hooper.
“But at a certain point, I think there was a handover to global economic growth really helping to carry the stock market.”
Big gains in U.S. blue chip companies have powered the Dow's relentless rise to new heights over the past year, including an 87 percent gain in aerospace giant Boeing, a 70 percent rise in construction equipment maker Caterpillar, and a 49 percent increase in Apple.
The Dow, which was founded in 1896 and is the oldest barometer of the U.S. stock market, has nearly quadrupled in value from its low during the financial crisis in early 2009.
But the global economy, and spending by people and businesses and governments, were much slower to recover than stocks were.
“Instead of fiscal stimulus, we relied on monetary policy stimulus, which inflates asset prices as opposed to the overall economy,” Hooper noted.
Stocks have continued to climb as investors saw signs economic growth finally was improving.
Technology companies, which put up some of the biggest gains in the last year, continued to lead the market higher.
And there was more good economic news yesterday: a report showed private U.S. businesses added 250,000 jobs last month, with smaller businesses adding 94,000.
The Dow, which tracks 30 big U.S. companies, rose 152.45 points, or 0.6 percent, to 25,075.13.
The Standard & Poor's 500, a much broader index that professional investors prefer to use as their benchmark for large U.S. stocks, rose 10.93 points, or 0.4 percent, to 2,723.99.
The Nasdaq composite, which is heavily weighted with technology and biotech companies, added 12.38 points, or 0.2 percent, to 7,077.91.
All three indexes set record highs a day earlier.
The Nasdaq reached a milestone of its own this week—closing above 7,000 points for the first time Tuesday.
U.S. President Donald Trump said yesterday that the Dow could reach 30,000, which would take another 20-percent jump.
But few on Wall Street expect stocks to climb that much anytime soon.
Stocks already did far better than most observers expected last year, and corporate earnings aren't rising fast enough to justify that kind of climb.