Home Uncategorized Dow Jones reaches record high, surpassing 40,000 for the first time, driven by expectations of rate cuts.

Dow Jones reaches record high, surpassing 40,000 for the first time, driven by expectations of rate cuts.

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Dow Jones peaked at 40,051.05, with S&P 500 and Nasdaq reaching record highs in early New York trading, later retracting slightly at session’s close.

On Thursday, the Dow Jones Industrial Average exceeded 40,000 for the first time, marking a record intraday high for the third consecutive day, driven by expectations of US interest rate cuts and robust corporate earnings.

Dow peaked at 40,051.05, with S&P 500 and Nasdaq hitting early record highs in New York trading, later reducing gains and closing slightly lower.

Despite steep rate hikes by the US Federal Reserve, the blue-chip index has rebounded from its October 2022 lows, propelled by resilient US economic growth.

The Dow Jones consists of 30 prominent firms like Apple, Walmart, and Boeing. Year-to-date, the index has surged by nearly 6%. It initially surpassed the 30,000 mark in November 2020.

Dow Jones
Source: NBC News

On Wednesday, data revealed a slowdown in consumer price inflation. However, on Thursday, this was countered by reports of a decline in US jobless claims and a 0.9% rise in US import prices last month, as per Reuters.

According to the CME FedWatch Tool, investors anticipate two quarter-point interest rate cuts from the Federal Reserve in the current year, with a 70% likelihood of the initial reduction occurring in September.

Quincy Krosby, chief global strategist at LPL Financial in Charlotte, North Carolina, told Reuters that the Dow hitting 40,000 signifies that despite worries about inflation and consumer sentiment, the companies in the Dow, reflecting various sectors of the economy, persist in advancing due to improved earnings and enhanced guidance.

However, all three Wall Street indices reduced gains on Thursday, with the Dow Jones Industrial Average closing 38.62 points, or 0.10%, lower at 39,869.38. The S&P 500 ended down 11.05 points, or 0.21%, at 5,297.10, while the Nasdaq Composite settled 44.07 points, or 0.26%, lower at 16,698.32.

In stock news, Walmart shares surged 7%, while Deere saw a 4.8% decline. Meme stocks GameStop plummeted 30%, and AMC Entertainment dropped 15%.

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