Investors are flocking to the US stock market, as fears about a possible market crash over the next year are spreading.
A key factor in the recent spike in demand is the expiration of a key US rule that restricts how much firms can buy and sell.
Analysts are warning of a global “crisis” of the same name that could lead to a plunge in the value of the dollar and a global economic slowdown.
The US Federal Reserve raised interest rates for the first time in a decade and a half in August to try to prevent a crisis, but it has been forced to do so again this year as the US economy continues to grow.
The market is also bracing for an early election, after the Republican-led US Congress failed to pass a budget in January.
The Dow Jones Industrial Average rose 1.3 per cent to 18,942.19, the S&P 500 rose 0.9 per cent and the Nasdaq Composite Index jumped 15.4 per cent.
The index is up about 0.5 per cent since mid-June.
In recent weeks, some US stocks have seen sharp rises.
Shares of General Electric Co rose 4 per cent in early trading after a US-European commission investigation found that the company misreported costs on the sale of the US air defense system.
The benchmark US stock index jumped more than 2 per cent on Monday.
Investors are betting that the Trump administration will not be able to prevent the stock markets from sliding as the economy slows and unemployment rises.
“Investors are looking for a bright future for their money, and they are buying American stocks, which are a very good way to do that,” said Steve Calk, chief US economist at Credit Suisse in New York.
“The problem is, that’s not the same as the Trump presidency, which is the one that has been going for about a decade now.”
The Trump administration is already under pressure to raise taxes, and a number of Republicans in Congress have voiced support for raising the tax rate on high earners to as high as 35 per cent from 15 per cent, which would also push companies to cut wages.
The White House said on Monday that it would unveil a plan to boost tax revenue and said it would also lower the corporate tax rate to 15 per of gross domestic product from 25 per.
The plan, which was first reported by the Wall Street Journal, is expected to be unveiled as early as Tuesday.
The Federal Reserve will release its policy stance on Wednesday.
The Trump era is already shaping up to be one of the most expensive of all time for American households.
The median household income has risen by less than $1,000 since 2016, and the inflation rate is now just under 1 per cent a year.
“I think the US is already looking at a crisis in 2018,” said Andrew Weiler, chief market strategist at Wells Fargo Wealth Management in Washington.
“In fact, if you look at the longer-term outlook, it looks very bleak.
You can see that for the next couple of years.”
In the US, the housing market is the worst-performing sector of the economy, with home prices rising at only a 2 per-cent annual rate.
The stock market has recovered somewhat, but many analysts say the stock-market crash has made it difficult to sell stocks or borrow for new ones.
“It’s like the stock bubble of the 1990s and 2000s.
It just went from a pretty bad bubble to a very bad bubble,” said Stephen Leeb, an analyst at investment advisory firm Capital One Wealth Management.
“We’re looking at an economic crisis here in the US.”
Investors are turning to the market for their savings amid concerns about a looming global economic slump.
The dollar is down more than 40 per cent against the euro in the past year, and inflation is expected in 2018 to reach 2 per 100 US dollars, a level economists expect to reach by mid-century.
But the Federal Reserve is expected by most analysts to raise interest rates by the end of this year.
Analyrs say a big factor in investors’ confidence is the market’s low level of risk and that US companies are still relatively safe.
“Most of the world is in a bubble now, so the fact that investors are still buying American assets makes the stockmarket look pretty safe,” said Weiler.
“There’s nothing to worry about.
Investors don’t have to worry much about the future.
If anything, we should be optimistic about the prospects for US growth.”
US stocks are up by about 9 per cent over the past two years, compared with an average gain of 4.7 per cent for the last 10 years.
The S&s 400 index is down by almost 4 per per cent this year, compared to a 6 per cent average gain in the last decade.