Dow hits 40,000 for the first time as bull market accelerates

Wall Street advanced into uncharted territory on Thursday, with the Dow Jones Industrial Average topping 40,000 for the first time after a blowout earnings report from Walmart cast a positive light on the economy fueling corporate America.

“The more important messaging from achieving one of these milestones is that corporate America is in pretty good shape,” said Art Hogan, a managing director and chief market strategist at B. Riley Financial. “It’s like getting a gold star in school — guess what, things are okay.” 

Ryan Detrick, chief market strategist at Carson Group, offered a similar take.

“Think about how many people were talking about recessions and bear markets all last year, now we are once again back to new highs,” said Detrick. “Investors who were patient and ignored all the scary headlines were once again rewarded, just as they have been throughout history.”

The Dow hit the historic mark as Walmart jumped 6% after delivering robust first-quarter results, with the index lately up 83 points, or 0.2% at 39,990. The big-box retailer reported a large jump in e-commerce sales as well as making inroads with high-income shoppers. 

“These are not inflation-driven results,” Walmart CEO Doug McMillon told analysts on an earnings call.

The S&P 500 and Nasdaq Composite also rose to record heights before paring their gains, each lately up less than 2%.

A slowly cooling but still resilient economy has been underlying corporate earnings even as expectations of five or six interest rate cuts by the Fed this year have ebbed. Odds of a rate cut in September increased some after data released on Wednesday showed a slight moderation in consumer prices in April.  

“The reestablishment of a disinflation trend in the coming months should allow the Fed to start easing policy in September,” according to Solita Marcelli, chief investment officer Americas, UBS Global Wealth Management, who still expects Fed cuts of 50 basis points in total this year.

Lower rates are likely ahead as inflation “drastically” improves in the second half of 2024, according to Detrick at the Carson Group. “It is an election year, so expect some bumps, but overall the bull market that stared in October 2022 is alive and well.” 

From Hogan’s perch, investors are just fine foregoing multiple rates cuts as long as the economy continues to perform and drive corporate earnings. As he put it: “We’re in a better place if we don’t need the Fed to come to the rescue.” 

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *