The Dow Jones Industrial Average closed slightly lower after briefly surpassing the 40,000 mark for the first time, reaching a high of 40,051.05. This milestone came as the culmination of a bull market that began in October 2022. The Dow had previously approached 40,000 earlier in the year but experienced a slight pullback in April due to concerns about high interest rates. However, the rally was reignited in May fueled by strong earnings and soft inflation readings. Ultimately, the Dow ended the day down 38.62 points, closing at 39,869.38, while the S&P 500 fell 0.21% and the Nasdaq Composite finished lower by 0.26%.
During the session, the broader market also saw gains, with the S&P 500 hitting a new record by closing above the 5,300 level for the first time and the Nasdaq reaching an all-time high. The Dow has climbed nearly 6% in 2024, while the Nasdaq and S&P 500 are up 11% each. The achievement of surpassing 40,000 is seen as a reflection of capital formation, innovation, profit growth, and economic resilience, according to John Lynch, chief investment officer at Comerica Wealth Management. He believes that the recent technical momentum and fundamental strengths, including earnings and interest rates, point to further near-term gains in the market.
Walmart played a significant role in propelling the Dow above 40,000, with the retail giant’s stock rising nearly 7% on strong fiscal first-quarter results. Walmart’s stock has seen a 21% increase in 2024. The market’s positive momentum has been driven by expectations of interest rate cuts and enthusiasm surrounding artificial intelligence, leading to a boost in investor sentiment. The CME Group’s FedWatch Tool shows that the first Federal Reserve rate cut is expected in September, following a smaller-than-expected increase in consumer prices reported earlier in the week. Tech-related companies such as Amazon, Meta Platforms, and Nvidia have also seen sharp increases in their stock prices this year.
Amazon, which recently joined the Dow in the first quarter, has risen by more than 20% in 2024. Other top performers in the Dow this year include American Express, up approximately 29%, and Goldman Sachs, which has increased by 20%. These companies have seen stock price gains as investors bet on a strong economy and consumer market, avoiding a potential recession. Analyst Ross Mayfield from Baird believes that the current rally has the potential to continue, describing it as a cyclical bull market that shows no signs of running out of steam. Overall, the market’s strength is attributed to factors such as strong earnings, low interest rates, and positive investor sentiment.
