Dow stretches new streak to 11 sessions

The Dow Jones industrial average capped off another profitable week by stretching its string of all-time closing highs to 11 sessions, its longest record-setting run since 1987.

A late-day rally propelled the Dow to its eleventh up day in a row and third straight week of gains, keeping alive the bullish vibe that has been in place since Feb. 9. Investors will quickly shift their focus to next week's main event: President Trump's key address to Congress Tuesday, a speech that Wall Street hopes will be laser-focused on his administration's economic agenda.

The blue chip stock gauge, which has not finished down since Feb 8, has rallied nearly 770 points, or about 4%, in its hot streak. On Friday, after trading in negative territory for most of the day, it eked out a gain of 11.44 points to close at a record 20,821.76. The Dow's 11-session winning streak matches a comparable run that ended back on Jan. 3, 1992, or 25 years ago.

More important, however, the Dow is chasing a string of 13 consecutive "record" closes dating back to Jan. 20, 1987, according to Bespoke Investment Group data.

The string of green arrows pointing up, however, is starting to make some Wall Street pros nervous. Indeed, as the winning streak has dragged on, Wall Street has trotted out a few reasons why a pause in the rally might be imminent. High up on the worry list: overly bullish investor sentiment readings, pricey valuations relative to earnings and trading data that suggest the intense buying binge isn't unsustainable.

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“The market has had a good run, (but) nothing goes straight up,” Gary Kaltbaum, president of Kaltbaum Capital Management told USA TODAY, adding that the end of the Dow's bullish run, when it does occur, “does not mean the end of the world.”

The Dow's surge has been driven by continued strength in the U.S. economy, and a belief that Trump’s economic policies will foster faster U.S. growth.

But some Wall Street pros worry that a euphoria is creeping into the stock market. The U.S. government bond market, in contrast, is exhibiting concern. Investors are diving back into bonds, despite talk of a coming interest rate hike from the Federal Reserve, driving the yield on the 10-year Treasury note down to 2.32% Friday, well off last week's high of 2.52%.

"It's a sign that not every investor is drinking the Kool-Aid," David Rosenberg, chief economist and strategist at Gluskin Sheff, warned in a report. He says the U.S. stock market is overvalued and that a price pullback is all but a certainty.

Some of the stock market’s hesitation Friday was due to investor trepidation ahead of the president’s address to Congress, says Kirra Fedyszyn, an analyst at Schaeffer’s Investment Research.

Wall Street is hoping that Trump will lay out in more detail his agenda of tax cuts for businesses and the middle class, as well as spending plans to upgrade the nation’s infrastructure. There is increasing concern among investors that Trump’s growth-friendly policies might not materialize fast enough to merit the sharp rise in stock prices.

Investors are also faced with the prospect of rising rates. This past Wednesday, the Fed noted in the minutes from its January meeting that its next rate increase could come “fairly soon.” The Fed last hiked rates in December, its second increase in borrowing costs since the end of the Great Recession. Low rates, which stimulate the economy, have been a key driver of the nearly eight-year-old bull market in stocks.

With few signs of recession on the horizon, however, most Wall Street pros are not expecting a sizable stock market downturn.

“Although the recent surge in the stock market has increased the risk of correction, we doubt a big fall lies around the corner,” John Higgins of financial firm Capital Economics, said in a report.