Dow breaks 23,000 mark for first time

The bull that has stampeded through the stock market this year ran through another barrier Tuesday as the Dow Jones industrial average briefly crossed the 23,000 mark.

The Dow, long a bellwether of U.S. stock market performance, finished the day up nearly 41 points and closed within 2.56 points of 23,000 after hitting that milestone in morning trading for the first time in its 121-year history.

It was another record high close for the index. The S&P 500 also closed at a record. The Nasdaq was essentially unchanged.

This bull market, which began nearly nine years ago, shows no signs of slowing.

"Before a market peaks, typically what you see, you have divergences, with some things going up, some things not going up and some things just staying steady," said Bruce Bittles, chief investment strategist at Milwaukee-based Robert W. Baird & Co. "But that's not the case here. All the indices are in harmony and in the same mode, which is a bullish mode making new highs."

The 23,000 threshold on the Dow represents the latest milestone during a period of nearly uninterrupted gains in the stock market. The Dow, made up of 30 largest, widely-held stocks, has rallied more than 3,200 points this year, gained more than 16% and leapfrogged the 20,000, 21,000, 22,000 and 23,000 thresholds in 2017.

Bittles says he sees none of the signs that tend to present themselves when a market is nearing its peak.

"Typically, tops take a long time to form, and before you do make the final top, you have fewer and fewer issues making new highs in fewer sectors," he said. "But that's not the case here. They're still expanding.

"I don't have anything to give me the opportunity to say, 'This is a high-risk area, the markets are likely to cave,' because I don't have any evidence," Bittles added.

He has been following the stock market for 51 years, and, no, he's never seen anything like this bull run.

"I saw the reverse of this in 1974 where the market went down every day in dribs and drabs almost for the entire year. But I've never seen it on the upside where the volatility is this low for this long," Bittles said. 

To be sure, stocks are pricey by historical standards. 

"The market has been in this high valuation bracket for a couple years almost," Bittles said. "Of course, it's gotten more overvalued this year.

"But valuations don't tell you the direction of the market," he added. "They are just not a very good tool for that." 

Still, history tells us that the market is due to take a break. But Bittles said there are no signs one is imminent.

"We haven't had a meaningful pullback in 18 months," Bittles added. "That's a very long period of time without a correction. But I don't have any evidence to say the market is particularly vulnerable here."  

If there is anything that might derail the rally, it might be the Federal Reserve Board's interest rate policy, Bittles said.

"The Federal Reserve Board has certainly shifted gears," he said. The Fed may raise rates again in December.

"Typically, the markets begin to misbehave after three or four rate hikes," Bittles said. 

The Fed has raised rates three times since December 2016.

"If the Fed tightens too much, that would be a negative for the market, but that would be a 2018 event," Bittles said. 

Also, if the economy began to weaken, that could hurt stocks, Bittles said. But there is no evidence of that happening.

If anything, the economy appears to be strengthening.

"The labor markets are strong. We're starting to see wage increases. Consumer confidence is at a 13-year high," Bittles said. "You have a lot of (positive) things going on and the stock market knows it." 

Adam Shell of USA TODAY and the Associated Press contributed to this report.