New Records on Wall Street, Economy Strengthens

On Wall Street, all major indices reached new all-time highs on Monday as strong economic indicators encouraged investors. The Dow Jones rose by 0.68 percent to 22,557 points, while the S&P 500 increased by 0.39 percent to 2,529 points, and the Nasdaq index climbed by 0.32 percent to 6,516 points.

The new record highs of these indices are attributed to the rise in stock prices in the mining, industrial, and financial sectors. The financial sector has been strengthening for days as an increase in the key interest rates of the U.S. Federal Reserve is expected for the third time this year by the end of the year.

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Money market traders estimate that there is over a 70 percent chance that the Fed will raise rates in December. Investors were encouraged yesterday by the data showing that manufacturing activities in the U.S. reached their highest levels in over 13 years in September as the industry recovers from the effects of Hurricane Harvey.

– Data on service activity are better indicators of the economic situation, but it is nice to see that production is also growing, says Scott Wren, strategist at Wells Fargo Investment Institute.

Market sentiment is positive also because investors hope that U.S. authorities will adopt the long-anticipated tax reform, although the recent proposal by U.S. President Donald Trump has faced a series of criticisms.

Taxes would be reduced for most Americans, but critics say that Trump’s proposal primarily benefits the wealthy and ‘business’ and does not offer solutions on how to compensate for budget revenues, which could lead to an increase in the deficit by trillions of dollars.

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– There are many details in the tax reform that need to be worked on, but the market seems ready to believe that something good could happen, says Scott Wren.

European stock prices also rose yesterday. The London FTSE index increased by 0.90 percent to 7,438 points, while the Frankfurt DAX rose by 0.58 percent to 12,902 points, and the Paris CAC climbed by 0.39 percent to 5,350 points.