Wall Street witnessed a record-breaking week, primarily driven by the latest consumer inflation data. On Wednesday, the headline consumer price index (CPI) for April came in at 3.4%, while the core CPI cooled for the first time since October 2023. Following the data, markets were off to the races as investors ramped up their Federal Reserve interest rate-cut bets. The positive sentiment pushed the benchmark S&P 500 above  5,300 for the first time ever and took the Dow Jones Industrial Average past 40,000 on Thursday in a historic first. For the week, the S&P 500 added 1.5%, the Dow rose 1.2%, and the Nasdaq climbed 2.1%.

The spotlight next week will be earnings from Nvidia on May 22. The perceived leader of the artificial intelligence (AI) space is expected to deliver solid results having repeatedly delivered blowout quarterly reports in the past showing massive demand for its AI chips. Its results will act as a barometer for the AI craze, and another strong performance could help Wall Street to new record highs.

Future Wealth’s View

With inflation cooling, the Fed will likely breathe a sigh of relief. The Federal Reserve has of course been trying to finish off residual price pressures by weakening demand through higher borrowing costs. And while much progress has been made, the last battle in the Fed’s war on inflation has proven harder than first expected, with the central bank’s 2% target still out of reach. With the latest report showing that US retail sales are stagnating, it appears that high borrowing costs and mounting debt are encouraging greater prudence among consumers which in turn could further lower inflation in the coming months.

Just last week in our report, we had stated that “We believe this bull market could move higher throughout the remainder of 2024” and also advised investors to stick to fundamentals when investing and not get emotional about market highs or lows. The U.S. economy has been resilient despite many macro pressures, the corporate earnings season has been better than expected, and consumer spending still appears to be healthy amid a tight labor market. These are clear signs that markets will continue to move higher.

Dow 40,000 is historic – The Dow is one of the oldest U.S. indexes, and was first launched in 1896. For the first time on May 26th 1896, the Dow made up of just 12 companies, closed at 40.94. It took almost a century for the gauge to reach 10,000, but subsequent milestones are getting quicker – 20,000 was reached in 2017 and it took less than four years to climb to 30,000 in 2021 (and that was with the coronavirus pandemic) and now we are 40,000 three years later. On a personal note, I started investing in 1991 when the Dow was at 3000 and Nasdaq at 500. I can attest that my wealth has climbed at least by an order of magnitude commensurate with the climb in the Dow since then.

Our report on May 30, 2021 was titled – DOW JONES INDUSTRIAL AVERAGE CELEBRATES 125 YEARS AND WE SAY “THANK YOU”. The link to the article is here https://futurewealthllc.com/dow-jones-industrial-average-celebrates-125-years-and-we-say-thank-you/
We should all once again say “Thank You”.