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Markets Right Now: Tech, health care lead early stock gains

20 January 2018

The US stock markets ended the session with rallies, backed by the publication of higher-than-expected financial results for some of the largest US companies. The Dow Jones Industrial Average closed marginally lower on Tuesday after the blue-chip index relinquished all its early gains in the sharpest daily reversal in almost two years.

Robust corporate earnings earlier in the day had sent the blue-chip Dow Jones Industrial Average across the threshold of 26,000 points, building on gains from Friday's record finish. The Dow's latest surge was its fastest in its 121-year history. Cadinha & Co. LLC now owns 90,798 shares of the exchange traded fund's stock worth $20,322,000 after purchasing an additional 89,005 shares during the last quarter. In December 1996 then chair of the Federal Reserve Alan Greenspan warned investors about their "irrational exuberance".

But many companies have said the windfall will go to increased payments to shareholders and share buybacks rather than more investments and job creation. Other factors fueling the surge this year are the simultaneous growth in economies around the world, and the expected boost to USA company profits and the American economy from the massive cuts.

US industrial capacity in use rose to 77.9%, highest since February 2015.

Bank of America reported a revised quarterly profit above analyst expectations.

Main Street investors, who have been on the sidelines for most of the nine-year bull run after getting burned in the last market crash in 2008-09, are turning more optimistic.

Stocks are off to a strong start this year. It ended above 25,000 on January 4.

Investors have been encouraged by strong global growth and rising company earnings.

The Russell 2000 index of smaller-company stocks gave up 19 points, or 1.2 percent, to 1,572.97.

ANALYST VIEWPOINT: "U.S. equity markets flip-flopped returning from the Martin Luther King Day holiday and coupled with the softer oil prices, set Asian markets for a day of contemplation", Jingyi Pan of IG said in a commentary. "We seem to be seeing that now". This is a bullish situation for the market.

This big intraday swing in markets sent the VIX towards a two-month high, and coming alongside a broad crash in cryptocurrency prices it started to feel a bit like the exuberant markets that came to define the early part of 2018 had begun to roll over.

"The average family is supposed get about $2,000 extra this year that they can spend on things they might not have spent on before", Golub sad.

Markets Right Now: Tech, health care lead early stock gains