Dow Hits Record High as Earnings Boost Investor Confidence Amid Election Focus
U.S. stocks closed higher on Wednesday, with the Dow Jones Industrial Average reaching an all-time high. The market reacted positively to the latest earnings reports from companies, including Morgan Stanley, and continued to focus on potential impacts from the upcoming U.S. presidential election. Additionally, Goldman Sachs significantly raised its target for the S&P 500 index.
The Dow rose by 337.28 points, or 0.79%, finishing at 43,077.70. Meanwhile, the Nasdaq gained 51.49 points, or 0.28%, to 18,367.08, and the S&P 500 increased by 27.21 points, or 0.47%, to 5,842.47.
Earnings reports remain the market's primary focus. Morgan Stanley reported third-quarter earnings and revenue that surpassed expectations, adding to investor optimism. The positive earnings from major banks influenced overall sentiment, counterbalancing weaker forecasts from companies like ASML.
The S&P 500 has risen 22% since the beginning of the year, signaling robust performance due to strong U.S. economic data and corporate earnings. Investors continue to flock to tech stocks poised to benefit from the AI boom. The index has recorded 46 new closing highs this year alone. Analysts at Goldman Sachs remain optimistic, projecting that this trend could extend into the latter part of 2024.
Goldman's tactical expert, Scott Rubner, anticipates the benchmark index to close the year significantly above 6,000 points. With historical data suggesting an average return of 5.17% from mid-October to year-end, the S&P 500 might reach 6,270 points by the end of the year, especially favored in an election year with a median return slightly above 7%.
Michael Brown, market strategist at Pepperstone, noted that recent declines in U.S. stocks might present an attractive entry point for investors. He suggests that if bank earnings continue to reflect broader corporate performance, the market could be further bolstered, especially with the Federal Reserve's accommodating monetary policies fostering additional confidence.
However, Bryn Talkington, managing partner at Requisite Capital Management, warned of possible market volatility in the upcoming weeks as investors navigate earnings season and the presidential election. This sentiment comes amid mixed company earnings reports, with strong results from major banks being partially offset by weaker performances in other sectors.