By Nicole Goodkind | CNN
New York – The Dow Jones broke 40,000 points for the primary time ever on Thursday morning, boosted by an encouraging inflation report.
The blue-chip index rose about 114 points, or 0.3%, to trade at about 40,022 mid-morning.
The markets then recovered to recent record highs on Wednesday The latest consumer price index showed a slowdown for the primary time in months, raising hopes that the Federal Reserve could begin cutting rates of interest as early as September.
On a monthly basis, the inflation report showed prices rose 0.3%, a slower pace than the previous two months, in keeping with the Bureau of Labor Statistics. Economists expected a monthly rise of 0.4%, in keeping with FactSet consensus estimates.
Another key data point added to the thrill: Retail sales in April were significantly weaker than expected, suggesting consumers are pulling back on the spending that drives the economy. Spending missed the 0.4% increase forecast by economists.
“This is the first good CPI report in four months and the market likes it,” said Gary Pzegeo, head of fixed income at CIBC Private Wealth US. “Taken [together with retail sales] This supports a Fed rate cut in the autumn. Markets predict a cut in September and have moved to cost in a second cut by December.”
Main Street vs. Wall Street
The recent record for the Dow, comprised of 30 blue-chip stocks, represents a symbolic shift for investors who – despite elevated rates of interest and inflation rates, geopolitical unrest and years of recession warnings – still feel good in regards to the U.S. economy.
It also shows a striking contrast between the mood on Wall Street and Main Street.
According to a, consumer sentiment has fallen to its lowest level in six months as price increases accelerated again University of Michigan Consumer Survey Released earlier this month.
The recent inflation crisis has Americans nervous in regards to the economy, and up to date CNN polls show many individuals consider the U.S. economy is headed within the incorrect direction. Some even consider that the United States is currently in a recession, although there isn’t a evidence of this.
According to CNN data from February, a complete of 26% of Americans currently say the economic situation has stabilized. Almost half of Americans say they consider the economy stays in a downturn.
The first three months of 2024 brought remarkable market momentum. The S&P 500 hit 22 recent records between January 1 and April. Since then, nonetheless, markets have turn out to be volatile as investors began to fear that inflation and rates of interest would remain high for longer.
Wednesday's CPI report modified that perception.
“This was a good report in the context of three hotter-than-expected events [CPI] reports, and it looks like it may have been more of a bump in the road than a truly stagnant inflation environment,” said Tyler Schipper, an economics professor on the University of St. Thomas in Minnesota, in an interview with CNN.
40,000 exceeded
“The Dow 40,000 milestone also shows how resilient the U.S. economy has been at a time when there have been numerous calls for a recession,” Art Hogan, chief market strategist at B. Riley Financial, said in a recent note to CNN .
“The overriding significance of crossing these big round numbers is that it brings the news from Wall Street to Main Street, at least for a day. It also serves as confirmation that corporate earnings are rising and investor confidence remains robust,” he said.
For many Americans, “the Dow” simply means the stock market. The index's small pool of stocks — from Microsoft to McDonald's to Chevron — represents a few of the country's largest firms and is widely utilized by retail and institutional investors alike.
A glance back
Here are some key stops on the Dow's journey to succeed in 40,000:
Dow is formed: The first day by day close on May 26, 1896 was 40.94. The Dow didn't get off to start, plunging 30% to an all-time low of 28.48 in August of that 12 months.
Dow 100: The Dow first closed in triple digits in January 1906. That marked a formidable rally for the common, which had hit an all-time low under Teddy Roosevelt's presidency. The Federal Reserve wouldn’t be created for an additional seven years.
Crash of 1929: The Dow fell 38 points on October 28 and one other 31 points the following day. That may not sound bad today, but it surely represented two consecutive declines of 13% and 12% within the Dow's value. These are still two of the worst single-day percentage declines within the index's history.
Dow 1,000: November 14, 1972. Richard Nixon had just won re-election by taking 49 states. Components of the Dow that were unchanged in 13 years included Woolworth, Eastman Kodak and International Nickel.
1987 crash: On October 19, the Dow plunged 508 points, a 23% decline, which continues to be the most important single-day percentage decline in history. Per week later, the value plunged 8%. But the damage was short-lived: inside a 12 months, the Dow Jones returned to its pre-crash level.
Dow 10,000: March 29, 1999. The “irrational exuberance” of the tech bubble was in full swing because the Dow gained 1,000 points in lower than a 12 months to succeed in that benchmark. It gained 1,000 more points in the next month alone.
A 12 months later, the dot-com stock bubble burst and the Dow Jones lost almost 30% by September 2001.
2008–2009 meltdown: The financial crisis caused the Dow Jones to lose about half of its value in lower than a 12 months, bottoming out at a closing price of 6,547 on March 9, 2009. The worst day was September 29, 2008, when the Dow lost a then-record 778 points after Congress rejected a $700 billion bank bailout package. The rescue operation was later approved.
Dow 15,000: May 7, 2013. As the economy continued to get better from the Great Recession, the Dow experienced one in all the strongest periods of the present bull market. It crossed the 15,000 mark and ended the 12 months up 26.5%, marking the most effective full-year performance of the present bull market. In 2017, the Dow reached almost the identical level, rising 25%.
Dow 20,000: January 25, 2017. The stock market had enjoyed run starting the day after the 2016 election, with the Dow gaining nearly 10% as investors looked forward to lower taxes and fewer regulation under the Trump administration.
Dow 25,000: January 4, 2018. The passage of the Trump tax cuts, particularly the reduction in the company tax rate in December 2017, helped fuel the rapid increase between 20,000 and 25,000.
Dow 30,000: November 24, 2020: Covid sent the stock market plummeting within the spring of 2020. But recent hopes for a vaccine and the outcomes of the presidential election ended an era of uncertainty on Wall Street and sent the stock market tumbling again.
The CNN Wire
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