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Dow Jones index tops record 25,000 with a push from lenders, tech firms

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The Dow Jones industrial average past 25,000 on Thursday. The biggest gainer was corporate technology provider IBM, which rose 2.2 percent to $161.93. (AP Photo/Mark Lennihan)

Wall Street titans and large technology firms led the Dow Jones industrial average past 25,000 on Thursday, the latest in a year-long series of milestones for the blue-chip index.

The widely followed gauge began 2017 with speculation about if and when it might top 20,000 after surging in the wake of Donald Trump's election to the US presidency. Traders, who bet heavily that the real estate mogul and a Republican Congress would reduce taxes and trim regulations that they said crimped corporate growth, subsequently drove the Dow up 26 percent for the year. The broader Standard & Poor's 500 index gained 20 percent in the same period.

Both have continued climbing early this year, and Trump, who has often taken credit for market gains in his presidency, did so again on Thursday, noting that "big cuts in unnecessary regulation" are continuing.

"With the positive fundamentals — an expanding economy, continued job growth, still-low interest rates and tax reform that promises to boost corporate earnings — it's no surprise to see the market continuing to climb," Greg McBride, chief financial analyst with Bankrate.com, said in a statement.

And continued labor market expansion may push it further. Deutsche Bank economists predicted Thursday that the latest employment data would show US employers added 220,000 jobs in December, up from a previous projection of 185,000.

The day's biggest gainer was digital manufacturer General Electric. After floundering in late 2017 when it halved this year's profit target amid a challenging market for its sizeable power business, the company founded by Thomas Edison climbed 2.2 percent to $18.53. Corporate technology provider IBM rose 2 percent to $161.70.

Both companies stand to benefit from a Republican-backed tax package that reduces the top corporate rate to 21 percent from 35 percent, as do lenders like investment bank Goldman Sachs and credit-card provider American Express. Goldman climbed 1.3 percent on Thursday to $256.83, while AmEx gained 1.3 percent to $100.85 and JPMorgan Chase, the largest U.S. bank by assets, jumped 0.9 percent to $109.04.

In addition to lower taxes, the financial institutions' earnings are likely to be buoyed by rising interest rates, which they typically pass on more quickly to borrowers than depositors. After raising short-term interest rates three times in 2017, the Federal Reserve signaled that three more hikes are likely this year.

Trading in interest rate futures indicates a 73 percent chance the next increase will be as soon as March, taking rates to a range of 1.5 percent to 1.75 percent.

In tandem with the Dow's record close at 25,075 on Thursday, which reflected a gain of 0.6 percent, the S&P 500 rose 0.4 percent to 2,723.

"The Dow is a figurehead of the market, but not a good barometer of it," McBride said. "The S&P 500 is a much better market indicator, and it recently crossed 2,700 for the first time, but that just doesn’t have the same ring to it."