Dow breaks 40,000 for first time ever as optimism for Fed rate cut grows

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The Dow Jones Industrial Average broke through the 40,000 point threshold for the first time ever as investors on Wall Street are feeling bullish over the prospect of interest rate cuts by the Fed as well as strong earnings reports by blue-chip companies.

The Dow surpassed its previous record high of 39,935.04, hit on Wednesday, and has surged nearly 40% since October 2022.

At 11:03 a.m. ET, the Dow was up 0.31%, at 40,033.02.

The Dow Jones Industrial Average broke the 40,000-point barrier for the first time in its history on Thursday. Google Finance

“Breaking the 40,000 barrier is a big psychological boost for the bulls as round numbers hold special significance in people’s hearts and minds,” Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, said in a note.

“We are in a Bull Market and people are showing some irrational exuberance (meme stocks) and dismissing bad news (slowing retail sales) and focusing on good news (slightly slowing inflation).”

US stock markets have climbed since the start of the year, as investors bet on an AI-led rally, robust earnings and hopes that the central bank will ease monetary policy this year.

All three major U.S. indexes hit fresh intraday record highs on the day.

Of the 30 companies on the Dow, American Express and retail giant Amazon are among the biggest percentage gainers so far this year, up 29% and 22%, respectively.

Chipmaker Intel, which trails other players in the surging market for AI components, is down 37% since the start of year, making it the Dow’s worst performer in 2024.

Planemaker Boeing follows Intel with a 30% year-to-date loss after the Jan. 5 mid-air panel blowout on a MAX 9 jet rekindled concerns about safety.

Traders on the floor of the New York Stock Exchange (seen above on Wednesday) have had plenty of reasons to smile lately. REUTERS

For the Dow, the journey to 40,000 from the 30,000-mark took a little more than three years, a faster climb than the previous 10,000-point clamber, at less than four years.

It took nearly two decades for it to move from the 10,000-mark to 20,000. The index, which dates to 1896, first touched 10,000 in March 1999.

Wall Street continued its rally from earlier this week after fresh data showed inflation cooled down in April after a hotter-than-expected start to the year, boosting bets that the Federal Reserve will finally start cutting rates this fall.

The Consumer Price Index, which tracks goods and service costs, rose 3.4% in April from a year ago — easing from the previous month’s 3.5% spike and in line with economists’ forecasts, according to FactSet.

The inflation rate was still well above the Fed’s 2% target. However, hopes the central bank will start its easing cycle in September were further bolstered by other data on Wednesday showing retail sales were unexpectedly flat last month.

With Post wires