Dow Jones Industrial Average Surpasses 40,000 Amid Oil and Gold Rally

On May 19, 2024, the Dow Jones Industrial Average (DJIA) closed above 40,000 for the first time, marking a fifth-consecutive weekly gain. The DJIA rose 134.21 points, or 0.3%, to 40,003.59, following a brief surge above the 40,000 level on Thursday.

The milestone comes as oil prices surged above $80 a barrel and gold futures rose 3.2% for the week. West Texas Intermediate (WTI) crude for June delivery rose 83 cents, or 1.1%, to settle at $80.06 a barrel on the New York Mercantile Exchange, up 2.3% for the week. July Brent crude, the global benchmark, climbed 71 cents, or 0.9%, to $83.98 a barrel on ICE Futures Europe, for a weekly rise of 1.4%.

Why this matters: The Dow Jones Industrial Average surpassing 40,000 is a significant milestone that reflects the resilience of the US economy and the stock market, despite ongoing challenges. This achievement may boost investor confidence and have a positive impact on the overall economy.

The recent surge in the market is attributed to renewed hopes of rate cuts from the Federal Reserve, which would loosen monetary conditions for consumers and businesses. A report from the Bureau of Labor Statistics indicating easing inflation has also contributed to the market's optimism.

Ryan Detrick, chief market strategist at Carson Group, commented: "40,000 is a great milestone, but end of the day there isn’t much difference between 39,999 and 40k. Still, this is a great reminder of how far we’ve come. Think about how many people were talking about recessions and bear markets all of last year. Now we are once again back to new highs."

Art Hogan, chief market strategist at B. Riley Financial, stated: "The Dow 40,000 milestone also shows how resilient the US economy has been, at a time where there was a plethora of calls for a recession."

The S&P 500, a more important index for Wall Street and retirement savers, added 6.17 points, or 0.1%, to 5,303.27, finishing just 0.1% shy of its record set on Wednesday. The Nasdaq composite slipped 12.35 points, or 0.1%, to 16,685.97.

Tyler Richey, co-editor at Sevens Report Research, noted, "Between the rebound in gasoline demand to back above its recent trend in the [Energy Information Administration] data, looming uncertainty surrounding the OPEC+ policy decision, and simmering geopolitical tensions in the Middle East and Eastern Europe, risks are skewed to the upside now after the sharp pullback that began in late April."

The DJIA has been climbing since autumn 2022, driven by the U.S. economy and corporate profits holding up despite high inflation, high interest rates, and recession worries. This milestone highlights the resilience of the market and the rewards for investors who stayed the course during turbulent times.

Key Takeaways

• Dow Jones Industrial Average closes above 40,000 for the first time.
• Oil prices surge above $80 a barrel, gold futures rise 3.2% for the week.
• Milestone reflects US economy's resilience despite challenges.
• Renewed hopes of rate cuts and easing inflation boost market optimism.
• S&P 500 finishes 0.1% shy of its record set on Wednesday.