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Record highs — What you need to know in markets on Friday

Myles Udland
Markets Reporter

Stocks are at record highs.

After 164 sessions without a record close, the Dow Jones Industrial Average on Thursday closed at a record high of 26,656.98, eclipsing its previous record set on January 26.

The benchmark S&P 500 also hit a record high, closing at 2,930.75, though the S&P had snapped its record-less streak back in August. “S&P 500 HITS ALL-TIME HIGH Congratulations USA!,” President Donald Trump said in a tweet on Thursday. 

The Nasdaq also closed higher on Thursday, rising just less than 1% to close above 8,000, but short of a record close.

Thursday’s record came during a week when the Trump administration has outlined its plans to increase tariffs on Chinese imports with reports suggesting Beijing will look to lower duties on imports.

The potential de-escalation of trade tensions by the Chinese government — coupled with investors’ general tendency to fade any increase in trade tensions and the relative outperformance of the U.S. equity market against international peers — all combine to set markets up for the kind of positive action we’ve seen this week.

Even more positively, the recent highs have been made with the vaunted FAANG names largely off their 52-week high, with Facebook (FB) and Netflix (NFLX) notably below record levels hit earlier this year.

Thursday’s closed the first record close for the Dow since January, ending a streak of 164 sessions without a new high. REUTERS/Brendan McDermid

The US equity market has had a solid September so far with the S&P 500 up more than 1%,” said Bespoke Investment Group in a note on Thursday.

“And these gains have come amidst what we deem to be healthy rotation… the index ETFs that are up the most in 2018 are actually struggling this month, while we’ve seen rallies in areas that had been underperforming on the year. 

“The ability for the stock market to continue rallying as leadership rotates represents bullish underlying ebb and flow that ultimately puts the major indices on even firmer footing heading into the home stretch of the year.”

As we began preaching last year, a relatively narrow leadership group for the market is not a problem and not abnormal. And rotation among sector leadership groups ought to be even more useful in hammering home that while some stocks have accounted for an outsized portion of the market’s gains, there is clear bullish trend intact for the U.S. stock market.

On Friday, investors will face a fairly light schedule with only the preliminary readings on manufacturing and services-sector activity from Markit Economics due out on the economic data side while no members of the S&P 500 will be reporting results.

Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland