The Dow is riding its longest winning streak since 2017. Here's why

The Dow Jones Industrial Average conscionable won't halt going higher it seems like. What is down this humanities momentum for the bluish spot measurement created much than a period ago?

The Dow connected Tuesday roseate for a 12th consecutive day, matching its longest winning streak since 2017. If it closes higher Wednesday, it would beryllium a streak not seen since 1987, erstwhile the Dow precocious for 13 sessions successful a row. During this latest run, the Dow has outperformed, gaining 6%.

That momentum hasn't been seen successful the broader S&P 500 and Nasdaq Composite indexes, however. Both are up conscionable 3% since the Dow's streak began. The S&P 500 has fallen doubly successful that time, portion the Nasdaq has posted 3 losing sessions.

There are respective reasons for the Dow's streak, but nary whitethorn beryllium bigger than recession fears easing.

Dow riding 12-day winning streak

"So far, there's nary grounds of a recession. So arsenic agelong arsenic there's nary grounds of recession ... I deliberation the marketplace volition astir apt proceed to melt up; radical are chasing," Steve Eisman, elder portfolio manager astatine Neuberger Berman, told CNBC's "Squawk Box" earlier this week. Eisman roseate to prominence for profiting from the subprime owe crisis. He was profiled successful Michael Lewis' publication "The Big Short."

Recession fears are easing successful ample portion owed to information showing ostentation is coming down.

Near the commencement of the Dow's winning streak, the user terms index, a wide utilized measurement of ostentation that tracks prices connected goods ranging from nutrient to electronics, roseate conscionable 3% connected a year-over-year basis. That was little than economists expected. the adjacent day, the shaper terms index, which gauges what wholesalers wage for earthy goods, climbed conscionable 0.1% successful June period implicit month, also little than forecast.

On apical of that, employment information points to a resilient economy. Companies proceed to hire astatine a dependable pace, arsenic the astir caller U.S. jobless claims information showed a decline.

The cardinal crushed beardown economical data, on with weakening ostentation numbers, tin payment the Dow much than different indexes is due to the fact that of its marque up. Many of the stocks composing the Dow are levered to an improving system (think American Express, Chevron, Coca-Cola, and 3M).

The smaller Dow has besides gotten a boost arsenic galore of its 30 members reported beardown quarterly reports.

On Wednesday, Boeing shares rallied astir 7%. The aerospace elephantine reported a smaller-than-expected loss and gross that exceeded expert expectations. The institution besides said it delivered 136 planes successful the 2nd quarter, up from 121 successful the year-earlier period.

Meanwhile, Coca-Cola gained astir 1% aft the beverage elephantine raised its full-year outlook and reported better-than-expected earnings. CEO James Quincey pointed to proviso concatenation pressures easing and added that "concern surrounding the slope assemblage diminished and vigor prices proceed to propulsion backmost from grounds highs."

Industrial elephantine 3M besides reported beardown second-quarter figures, with net and gross exceeding expert expectations. The banal popped 5% connected Tuesday aft the results were released.

The Dow's mechanics could besides beryllium playing a portion successful its rally. The mean is terms weighted, meaning that a banal with a higher stock terms volition exert greater power connected the wide Dow level than 1 with a little stock price. The S&P 500 and Nasdaq, meanwhile, are marketplace headdress weighted — meaning stocks with higher marketplace caps volition person much sway successful however the indexes trade.

Goldman Sachs, the banal with the second-highest terms successful the Dow, is up much than 10% this month. UnitedHealth, which has the highest price, is up much than 6% successful that time.

Bottom line: Several factors person conspired to propulsion the Dow into a perchance historical winning streak. If the benchmark rises Wednesday and Thursday, it volition necktie its longest-ever winning streak astatine 14 — which took spot successful 1897, astir a twelvemonth aft the Dow was created.