Stocks race to records as earnings remain strong

Bloomberg

US stocks jumped to records with the Dow Jones Industrial Average crossing 26,000 and S&P 500 Index surpassing 2,800, both for the first time, as Citigroup Inc. posted healthy earnings and discussed possible significant investor payouts from the bank’s windfall stemming from a major tax cut.
All major US equity gauges were higher. The dollar gained after its lowest close in three years, rising alongside Treasuries as Congress tries to avert a government shutdown. Gold and oil dropped.
Bitcoin joined a slump in cryptocurrencies, tumbling 13 percent to around $12,000.
The recent surge in US equities has some investors wondering if there’s too much short-term froth in the market.
“The speed at which the market has moved higher these past two weeks is unsettling and the risk of overheating this year is rising,” said Chris Zaccarelli, chief investment officer for the Independent Advisor Alliance.
But he added that “fundamentals are strong and there are a number of tailwinds,” including a synchronised global economic recovery.
The euro came under pressure as prospects for a German coalition government were dealt an early blow, and on reports the European Central Bank will maintain a bond-buying pledge when it meets next week. That helped spur both core and periphery debt. The Stoxx Europe 600 Index climbed, tracking an advance in the MSCI Asia Pacific Index after Hong Kong stocks hit a record. Emerging-market stocks jumped, consolidating at the highest level in almost a decade.
With stock gauges worldwide extending records on the back of global growth and in the wake of last week’s wobble across the bond market, investors are increasingly alert for potential threats to the risk-on mood. As earnings season picks up steam, corporate results are set to be the next big focus, ahead of central bank meetings in the US, Japan and Europe before the end of the month.
Meanwhile, the yen dropped following a five-day increase amid a warning from Japan’s finance minister about excessively rapid moves in the currency market. Sterling slipped on easing inflation.
Earnings season ramps up: Taiwan Semiconductor Manufacturing Co., ASML Holdings NV, Bank of America Corp. and Goldman Sachs Group Inc. are among some notable releases. Industrial production in the US probably increased in December, a report may show Wednesday, completing a solid year for manufacturing.
The S&P 500 rose 0.7 percent to 2,804.76 and the Dow was up 1 percent to 26,058.53 as of 10:20 am in New York. The Stoxx Europe 600 climbed 0.3 percent. The MSCI All-Country World Index gained 0.4 percent to an all-time high. The MSCI Emerging Market Index jumped 0.8 percent to a record.