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Friday, June 5, 2020  Spokane, Washington  Est. May 19, 1883
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Dow Cracks 7,000 Powerful Bull Market Passes Another Milestone

By Farrell Kramer Associated Press

The unflappable stock market continued to roll Thursday, pushing the Dow Jones industrials above 7,000 for the first time and further punctuating one of the most powerful bull markets in history.

Professionals and individual investors alike expressed awe at the market’s ability to knock off yet another major milestone. The benchmark Dow average first moved above 7,000 in the early afternoon, retreated, but then climbed again to close at 7,022.44.

That left the Dow with a 60.81-point gain on the day and brought its advance to almost 9 percent so far this year. The 30-stock index surpassed 6,000 in October and 4,000 less than two years ago.

Its trip from 6,000 to 7,000 was the fastest 1,000-point advance ever.

“It’s unbelievable, actually,” said Steven Nagata, a fashion industry executive visiting a Fidelity Investments office in Manhattan. He said he remains comfortable in the market, despite the dizzying heights.

Many investors like Nagata continue to pour money into the stock market through mutual funds, which is one big reason for its powerful rise.

On Wednesday, a trade group reported that stock and bond funds received an additional $27 billion last month, most of it going into stocks.

Simple supply and demand suggests prices will rise in such an environment.

Strong corporate earnings and data suggesting the economy is not growing too fast also have helped prices higher. A bubbling economy can trigger inflation, which could prompt the Federal Reserve to raise interest rates. The Fed, in fact, decided against raising rates just two weeks ago.

Higher rates are designed to slow the economy, which would then reduce corporate profits. Profits are a primary driver of stock prices.

Also critical to the market’s run, though, is psychology. Investors seem convinced the stock market can go nowhere but up, despite several stumbles so far this year.

“Unbridled greed and lust,” said Stephen S. Roach, chief economist at Morgan Stanley & Co. “There is a conviction that we are in a perfect world, irrespective of any growth rate, where we will never again have any problem with inflation, Fed policy and interest rates.”

Roach is somewhat skeptical that the good times will continue to roll without pause. Many believe the economy’s growth will eventually generate a resurgence of inflation and force the Fed to act.

For now, investors seem to be ignoring that likelihood.

“It’s a little bit scary,” admitted Ed Sunoo, a finance industry worker who was also at the Fidelity office. But Sunoo says he’s confident in the market over time, waiting for minor pullbacks to buy more shares.

Graphic: The Dow’s climb

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