For the first time in history, the Dow Jones Industrial Average surpassed 40,000 points on Thursday, a mark of a healthy U.S. economy. The historic high came after Wednesday’s release of data showing that annual inflation is easing after three months of unexpectedly high numbers. The Nasdaq and S&P 500 also hit record highs on Thursday.
The market rally can also be contributed to a fervor about artificial intelligence, as investors go all in on AI companies. The “Magnificent Seven”—that is, Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla—have also helped boost the markets.
By the end of the day, the Dow slipped back down to 39,869 points. But the question is—will the market sustain those gains? In reviewing growth, the labor market and corporate profits, all signs point to be optimistic. However, inflation is the wild card, as current rates have driven up the prices of loans and everyday goods.
Although surpassing 40,000 points isn’t substantially significant, it is a psychological tipping point. If inflation continues to ease, the Federal Reserve could start making cuts to interest rates. There could also be hope that the economy will reach the magical “soft landing,” where the Fed brings down prices without provoking a recession.
