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The Dow Jones Industrial Average has passed the 20,000 milestone for the first time on January 25.

The S&P 500 and tech-heavy NASDAQ were also at new highs, fuelled by hopes that President Donald Trump’s policies will boost the economy.

The Dow was up 0.8% at 20,074 points in afternoon trading.

Investors’ cash has poured into shares on hopes of tax cuts and higher growth.

Image source AP

Donald Trump’s senior adviser Kellyanne Conway was quick to comment on the news, tweeting that the landmark was down to “The Trump Effect”.

If the index stays above 20,000 by the time the day’s trading ends, then it would mean the 42-session rise from the first close above the 19,000 mark would be the second quickest 1,000 point rise of all time.

The Dow rose from 10,000 to 11,000 in only 24 trading days between March 29 and May 3, 1999, while the rise from 18,000 to 19,000 took 483 trading days (nearly two years).

Financial stocks have been a major factor in the gain – with Goldman Sachs and JPMorgan accounting for around 20% of it.

This is because investors believe that some of Donald Trump’s policies will trigger inflation and produce a rise in interest rates.

The Dow Jones Industrial Average has hit 17,000 for the first time.

On July 3, investors pushed shares higher after a better-than-expected jobs report showed the US economy added 288,000 jobs in June.

Overall, low interest rates have led investors to pour money into stocks in an effort to make a profit.

That has pushed US indexes – including the S&P 500 – to new highs in 2014.

On Wednesday, the Dow closed at its 13th record high for the year, and the S&P 500 hit its 24th closing high for 2014.

The Dow Jones Industrial Average has hit 17,000 for the first time

The Dow Jones Industrial Average has hit 17,000 for the first time

A string of positive economic news combined with increasing merger and acquisition activity has buoyed investor confidence on Wall Street.

Thursday’s positive jobs figure capped a week of good reports globally, including news that China’s manufacturing activity hit a six-month high in June.

Overall, investors have been pouring money into stocks over the past year and a half, partially as a result of the policies of the Federal Reserve.

The Fed has taken extraordinary measures to keep interest rates low in an effort to encourage banks to lend and thus stimulate economic growth.

Low interest rates, however, have also meant that firms are less inclined to keep extra cash on hand where it is not earning money.

That has spurred increased merger and acquisition activity, with companies in the pharmaceutical, food processing, and technology industries all announcing strings of acquisitions in recent weeks.

Some have worried that in keeping rates so low, the Fed is encouraging a bubble in the stock market.

However, on Wednesday, Fed chair Janet Yellen said in a speech in front of the International Monetary Fund that the central bank would not raise rates in an effort to deter financial excesses.

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US shares closed at record levels after the Federal Reserve (Fed) indicated that its efforts to boost the economy would continue for now.

The Dow Jones Industrial Average closed 1.1% higher at 15,460.92 and the broader S&P 500 added 1.3% to end at a new peak of 1,675.02.

Both measures surpassed previous record highs hit in late May.

Investors have been focusing on when the Fed might end its massive bond-buying programme.

Fed chairman Ben Bernanke had made previous comments suggesting the policy would be phased out.

But on Wednesday Ben Bernanke clarified his position, saying a “highly accommodative” policy was needed for the foreseeable future.

US shares closed at record levels after the Federal Reserve indicated that its efforts to boost the economy would continue for now

US shares closed at record levels after the Federal Reserve indicated that its efforts to boost the economy would continue for now

Since late last year, each month the Fed has been buying $85 billion in Treasury and mortgage bonds.

The purchases have kept interest rates low, with the aim of encouraging more Americans to buy homes and cars, and hopefully bolster economic growth.

Investors worry that once the Fed starts scaling back its bond buying, interest rates will rise.

“The Fed has made it unequivocally clear that they are not in any hurry to do anything,” said Alec Young, Global Equity Strategist at S&P Capital IQ.

“It’s very bullish for stocks,” he added.

The S&P 500 index has risen for six trading sessions in a row, the longest winning run in four months.

The Nasdaq composite rose 1.4% on Thursday to close at 3,578.30, its highest level in almost 13 years.

Microsoft was one of the biggest winners on the stock market on Thursday.

Its shares jumped 2.8% after the company announced a plan to overhaul its structure.

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New York stocks on Wednesday night took fright at the outcome of the American presidential election as the world braced itself for prolonged and difficult negotiations over the US budget deficit and debt levels.

Despite all the discussion of a bipartisan approach to tackling the US’s $1trillion a year budget deficit, investors fear that President Barack Obama will face a renewed struggle reaching an agreement with Congress by the deadline for the “fiscal cliff” of January 1st, 2013.

Failure to meet that deadline, enshrined in law, would mean that automatic budget cuts and tax rises would come into effect taking $600 billion out of the economy and sending America and much of the rest of the world back into recession.

In trading on Wall Street, the Dow Jones Industrial Average plunged from the opening bell and by mid-afternoon was showing a loss of 300 points or 2.24% the biggest single day fall in 2012 and the largest loss since November 2011. It closed down 312.95 points at 12932.73.

Disquiet about the outcome of the election and its impact on the rest of the world triggered a worldwide reaction with the FTSE 100 index plunging in its wake by 1.58%.

The overall mood on the markets was not assisted by fears of a deep slowdown in Europe and further troubles on the streets of Athens as Greek parliament met to approve a new fiscal package.

Among the biggest fallers on Wall Street were banking shares with JP Morgan, Citibank, Bank of America and Morgan Stanley suffering big setbacks. Although New York state was a solid Democratic win in the election, the banks were big financial backers of Mitt Romney in the hope he might ease some of the onerous regulation imposed since the Great Panic of 2008 if he won.

Matters were not helped by the intervention of Goldman Sachs that has lowered its forecast for American growth next year from 1.9% to 1.5%, barely enough to lower unemployment from its current level of 7.9% of the workforce.

In contrast to share prices, however, the dollar advanced against both the pound and the euro as part of the flight to safety, including American bonds, by international investors.

In times of uncertainty investors traditionally move away from risky assets like shares and opt for hard currencies and bonds. The pound was trading last night at just below the $1.60 level at $1.5986.

Dow Jones plunges 300 points after Barack Obama re-election as Wall Street suffers worst day of the year

Dow Jones plunges 300 points after Barack Obama re-election as Wall Street suffers worst day of the year

A big concern on financial markets is that the credit rating agencies will decide to follow the actions of Standard & Poor’s in August 2011 – when the last budget negotiations were in full flow – and remove the AAA credit rating enjoyed by the US.

In a note Fitch said the President would need to quickly secure a deal with Congress to avoid the fiscal cliff and raise the debt ceiling – the total amount of debt that the US can issue – if a ratings downgrade was to be avoided. America has among the highest debt levels in the Western world at 107% of gross domestic product according to the International Monetary Fund.

The fear is that unless Congress and the White House can deal with the fiscal deadlock before January 1st, 2013, then the automatic cuts would immediately trigger a recession potentially wiping as much as 2.5% of output and leading to a sharp rise in the jobless rate.

There had been hopes the election would cleanse the poison in US politics that has held up budget negotiations. In reality nothing has changed in that a Democratic president still has to deal with a hostile House where the Tea Party extremists still hold some sway.

They believe that the US’s budget problems would be solved by cutting welfare payments and keeping taxes low.

Another credit rating agency, Moody’s, said it would not be changing its assessment of the US economy until after the deadline for the fiscal cliff had passed.