A toy bull figurine sits on a financial trader’s desk as the DAX Index curve is displayed on an electronic board behind at the Frankfurt Stock Exchange in Frankfurt, Germany.(Photographer: Martin Leissl)

Bull Market Back in Sync as Dow Finally Eclipses January High

(Bloomberg) -- The last victim of the inflation and trade scares that roiled U.S. equities earlier this year has finally recovered.

The Dow Jones Industrial Average rode its seventh gain in eight days to an all-time high of 26,657, capping a seven-month slog back from one of the biggest routs of the bull market. Intel Corp. and Caterpillar Inc. led the final leg of the advance, rising more than 2 percent Thursday.

The record comes as investors shrug off the latest salvo in the U.S.-Chinese trade scuffle and a rout in Treasuries that took the 10-year yield to heights that rattled stocks in February. With the Dow joining the rest of the major American benchmarks in rebounding from the early-year tumult, the breakout is likely to be cheered as a sign that the 9 1/2-year equity rally is broadening.

Bull Market Back in Sync as Dow Finally Eclipses January High

“It provides confirmation that the markets for the most part are not showing the sort of divergence that would be real, long-term concern,” said Bruce McCain, the chief investment strategist at Key Private Bank in Cleveland. “The bull market is still in place and has further room to run.”

The Dow’s 166-day streak without a record was the second-longest since the market surpassed the last bull market peak in 2013.

The index’s method of weighting stocks by price instead of market capitalization likely contributed to its sensitivity to the trade war. Its biggest component is Boeing Co., a stock that’s largely served as a proxy for investor sentiment regarding tariffs. A slowdown in the global economy outside of the U.S. also hurt, as the 122-year-old gauge houses bellwethers for global growth, such as Caterpillar.

In contrast, the domestically focused Russell 2000 rebounded from its February slide by May as a surging dollar and optimism in the American economy drove demand for small caps. At the height of trade anxiety, the Dow’s year-to-date performance trailed the Russell 2000 by about 12 percentage points. Since then, the gap has narrowed to 4 points.

That’s a departure from the past decade when the Dow has tended to lead the broader market. In 2013, the 30-member gauge ended a 5 1/2-year hiatus without a record on March 4, three weeks before the S&P 500. In 2016, when stocks finally awoke from two years of stagnation, the Dow broke out the same day as the S&P 500 did.

Eight stocks have climbed more than 10 percent since the Dow’s January peak. Apple Inc., Nike Inc. and Microsoft Corp. performed the best, with gains of at least 20 percent.

The Nasdaq Composite was the fastest of the major indexes to reclaim a high, accomplishing the feat in March. The S&P 500 did so last month as its bull run became by most measures the longest on record.

©2018 Bloomberg L.P.