For the second straight session, the Dow Jone Industrial Average hit another all-time record high, this time closing the day on Tuesday at 18,312.39 and hit an intraday high of 18,351.36, according to the USA Today. The trading was mixed as the S&P 500 index fell 1.37, or 0.1%, to 2127.83, after setting a record all-time high the previous day of 2129.20. The Nasdaq composite index ended down 8.41, or 0.2% to 5070.03.
Walmart (WMT), an element of the Dow, was a drag on the market as its “missed” earnings report disappointed investors. WMT closed at $76.43, down 3.49, with a loss of 4.37 percent. The company blamed it on two factors: higher wages for workers and a stronger dollar. Walmart and many large cap companies have been under political pressure to raise the wage of its lowest paid workers.
By contrast, home improvement retailer Home Depot (HD) posted earnings and revenue that beat Wall Street expectations as sales rose 6.1%. The home improvement retailer also raised its outlook and cited the continued recovery of the U.S. housing market for its strong start to the year. Despite the beat, shares lost 1.7%.
At present, the “Obama Stock Market Rally” is the third longest in American history, according to CNN/Money. This “Obama Rally” has lasted more than 2250 days (and still climbing). The second longest rally lasted at the end of the Truman administration and through the first half of the Eisenhower administration (1949-1956), for a total of 2,607 days. The longest period ran from the tail end of Reagan, through four years of George H.W. Bush and all the way through the Clinton years (1987-2000).
According to CNN/Money, a “bull market will end when there’s a 20% or greater drop from the high point of the Dow, the S&P 500 or other major indexes. The current bull market has seen a few corrections — when there’s a 10% dip — but nothing much bigger than that.”
This market has been remarkably strong, however. On President Obama’s first inauguration day on Jan. 20, 2009, the DJIA was sitting at 7,949.09. It then bottomed on March 9, 2009 at 6,547.05, which at the time was its lowest level since 1997. It has not looked back since. The Dow is up a whopping at least a whopping 175 percent since then.
The biggest fear and the biggest threat to ending the rally can be summed up in three words: Higher Interest Rates. That remains to be seen and will depend on Fed chair Janet Yellen.
Tracie McMillion, an asset allocation strategist for Wells Fargo, told CNN/Money, “We think that because of the significant downturn that we experienced in 2008 and 2009, this particular bull market could have a longer run than average.”
At least to the end of the Obama administration. After that, much will depend on the 2016 presidential election.