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Look Who's 40...

Look Who's 40...

May 21, 2024

In case you missed it, this past Friday debuted a momentous milestone as the Dow reached a new high of 40,000. This new mark has everyone watching and wondering what is next. Below is a brief market overview of the 2 main focus areas that we are regularly keeping in view. We strive you keep you updated on the significant market highlights and trends to help you navigate your financial course.  

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Dow 40,000

The week began quietly as market averages traded in a tight range, awaiting fresh inflation news. On Tuesday, markets rose steadily throughout the day after digesting a mixed wholesale inflation report.1

The next day, a cooler-than-expected Consumer Price Index (CPI) report sparked a broad-based rally as the upbeat news raised investors’ hopes for a rate cut. The Nasdaq Composite and Standard & Poor’s 500 (which ended above 5300 for the first time) closed the day up 1.4 percent and 1.2 percent, respectively. Meanwhile, the bellwether 10-year Treasury yield fell to 4.35 percent.2,3

Investors took a break as the week ended, mostly yawning at mixed economic data. Notably, the Dow closed just above 40,000 on Friday.

Inflated Expectations

With the two critical inflation updates last week, attention shifted to the Federal Reserve’s next steps with interest rates. The top-level CPI numbers (known as headline inflation) tend to be less important than what’s underneath: core inflation (CPI minus volatile food and energy prices) in the Fed’s eye. Core CPI came in at 0.29 percent for April, just below the 0.30 percent from Wall Street. It was the first time the core CPI was lower than forecasts in three months. The news revived speculation that the Fed might consider a rate adjustment as early as September.4,5

Footnotes and Sources

  1., May 14, 2024
  2. The Wall Street Journal, May 15, 2024
  3., May 17, 2024
  4., May 14, 2024
  5. The Wall Street Journal, May 15, 2024