Dow Crosses 40,000 For First Time In History

TOPLINE

The Dow Jones Industrial Average made history Thursday, setting the latest impressive milestone for 2024’s red-hot stock market.

KEY FACTS

The Dow crossed 40,000 for the first time in its 128-year history Thursday at about 10:30 a.m. ET, gaining as much as 140 points (0.4%) to a new all-time high of 40,046.21.

The Dow, which tracks 30 of the most valuable U.S. public companies across a gamut of industries, is up 6% this year and 23% from its October bottom, reflecting the positive shift in investor sentiment over the period.

Boosting the Dow on Thursday was retailer Walmart, whose shares rallied 7% to an all-time high after reporting first-quarter earnings.

SURPRISING FACT

It took 103 years for the index to top 10,000, set during the dot-com boom in March 1999, another 18 years to cross 20,000, accomplished in Jan. 2017, about 3.5 years to surpass 30,000 in Nov. 2020 and another 3.5 years to eclipse 40,000.

KEY BACKGROUND

The Dow differs from the U.S.’ two other leading stock indexes – the S&P 500 and tech-heavy Nasdaq Composite – in its narrow basket of constituent companies and its weighting based on share prices, rather than market capitalization. Both the S&P and the Nasdaq also sit at record highs. The 3.5-year period between the Dow’s first times above 30,000 and 40,000 was a rollercoaster. Stocks crashed in 2022 as high inflation caused the market to brace for higher interest rates, which typically bring down stock prices as investors opt for higher returns on bonds and react to worsened corporate earnings power due to higher borrowing costs. But even as interest rates climbed to a two-decade high, stocks stormed ahead, helped by expanding price-to-earnings valuations thanks to artificial intelligence optimism, companies’ tightening of their belts and expectations of interest rate cuts beginning this year.

CRUCIAL QUOTE

The Dow’s 40,000 milestone is a “big psychological boost” for investors, Chris Zaccarelli, Independent Advisor Alliance’s chief investment officer, wrote in emailed comments.

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