Everything to Know About the Day the Dow Hit 16,000
The numbers 16,000 and 1,800 don't represent some obscure historical sports stats. No, that pair of fancy-looking round numbers carries some heft on Wall Street. On Monday, for the first time in each index's history, the Dow rose 14 points to pass 16,000 and the S&P 500 reached 1,800 points by midday. Mazel tov, markets.
1. China sends stocks up, then Icahn sends stocks down
In the morning, stocks got pushed to those new record highs on some solid news that was "Made In China." The Chinese government teased about some upcoming financial reforms that will include loosening restrictions on its financial industry and improving its growing initial public offering (IPO) market (CNBC).
But after lunch, stocks fell back following Scrooge-like comments from super/activist investor Carl Icahn. In a Reuters-sponsored conference, the billionaire warned that he was "very cautious" on the stock market and expects a "big drop" because he thinks that recent corporate earnings results have only been good because interest rates are low, encouraging businesses to borrow and grow -- not improve their businesses through good management (ValueWalk).
The takeaway is that the Dow has been on a tear all year, rising 22% in 2013. Valuations are the highest in three years. Most of the mojo has come from investors hoping that the Fed will continue its stimulus policies to keep the economic recovery moving. And with stimulus friend Janet Yellen set to take over the Fed soon, Wall Street keeps pumping up stocks to fresh records.
2. Boeing up nearly 2% on biannual Dubai Expo
Dubai is known for laughably tall towers, huge man-made island paradise cities, and other things that UAE asked a genie for. It's also a popular place to have expos, and Monday the airplane manufacturer Boeing announced some major new orders at the Dubai airshow. Three Middle Eastern airlines have ordered 225 of Boeing's shiny new 777X planes that are planned to hit runways in 2020 (Business Insider) (airlines clearly have no long-term commitment issues).
Take that, France. The American airbus really put it to its European competition Airbus with the big announcement. Boeing shareholders are praying to Michael Jordan, the god of Air, that the 787 and 777X will fly "like Mike." Monday's announcement brings 777X orders to about $95 billion, so the exciting news lifted the company's stock by 1.6%.
3. JPMorgan rises after $4.5 billion fine announced
That $4.5 billion number posted above is part of JPMorgan Chase's historically large settlement with the Justice Department for its shady mortgage business leading up to the housing crisis. America's biggest bank is cutting an $8.5 billion "fraud ticket" (damn cops... tickets suck), but the $4.5 billion reported Friday afternoon is the core and complicated part of the settlement that was holding the deal from becoming official (The Street).
Demolition and "I forgive you" Hallmark cards. The $4.5 billion is the part of the settlement that is supposed to help the victims of JPMorgan's behavior, i.e., struggling homeowners: About $1.6 billion will be spent on demolishing old crumbling houses that are weighing on local housing markets; $400 million will essentially be debt forgiveness to homeowners owing more in debt than the house is even worth; and the rest will go to helping low-income and struggling want-to-be-homeowners become the real thing. This injection of $4.5 billion will help homeowners reduce debt, increase the equity in their home, get a house, or an open house party of all of the above.
JPMorgan rose 1.6% Monday as this dirty scandal has been lurking in the back of investors' minds for years, and this settlement, which could be publicly announced by JPMorgan as soon as Tuesday, will be the symbolic stake through the symbolic vampire heart that is the mortgage crisis for the Wall Street bank. JPMorgan has plenty of funds in its legal reserves and investors are pumped about the closure.
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As first published on MarketSnacks.com.
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