The stock market has seen a recent run of good fortune that was headlined by the Dow Jones Industrial Average reaching 16,000 for the first time ever on Nov. 18. Experts attribute this record-breaking milestone to strong growth in the economy and the Federal Reserve's stimulus plan.
The activity in the stock market began to ramp up on Nov. 15. as the blue-chip index increased 0.5 percent to close at 15,961. This boost marks the fifth highest close in six sessions. Along with the Dow Jones, Standard & Poor's 500 also reached a historical level.
The S&P 500 attained a significant milestone by reaching 18,000 for the first time. This historical achievement caps a financially strong year for S&P. The Washington Post reported that the S&P 500 index has been steadily increasing over the last six weeks and is up 26 percent so far his year. The NASDAQ Composite fell short of hitting its highest level of 4000.
Many stocks are contributing to this rise in the market. The Bespoke Investment Group reported the S&P 500 has more than 80 percent of its stocks trading above average price. One of the largest contributors to this stock increase has been airline manufacturer Boeing. The Chicago-based company saw an increase in stock value after it received 259 orders for its new 777X jetliner, which has a list value of $95 billion. The Wall Street Journal reported that another Dow affiliate, J.P. Morgan Chase, saw an increase after announcing it will help investors recoup their losses. The New York-based bank announced on Nov. 15 that it came to an agreement to pay $4.5 billion to investors who lost their money due to buying mortgage-backed securities.
Federal Reserve is playing a role
The stock market's stable rise this year is also connected to the Federal Reserve's stimulus program, which is currently buying $85 billion a month in bonds in order to stabilize the economy. In September, many investors believed the Fed would be scaling back on its program, but the government organization surprised many by announcing it would be continuing with the program. Experts believe this steady growth will continue if Fed chairman nominee Janet Yellen is confirmed.
At a confirmation hearing on Nov. 14, Yellen endorsed the Fed's low interest-rate polices, which have been a major factor in the economy's growth.
"The ripple effects go through the economy and bring benefits to, I would say, all Americans," Yellen said at the confirmation hearing. "If we can generate more robust recovery in the context of price stability, then more Americans will see meaningful increases in their well-being."
Yellen went on to say that although there are many economic downturns, continuing this program will help the economy as a whole.
"We know that those long spells of unemployment are particularly painful for households, impose great hardship and costs on those without work, on the marriages of those who suffer these long unemployment spells," she added. "So I consider it imperative that we do what we can to promote a very strong recovery."
Experts caution patience
Tim Hartzell, chief investment officer at Sequent Asset Management said the economic world will be paying a lot of attention to Yellen if she is confirmed as the new chairman.
"As we keep going and making new highs, we get into new territory and the air keeps getting thinner and thinner up here," Hartzell told Bloomberg. "Everybody is watching Yellen and feel comfortable that she'll continue QE, maybe even put more into the system."