Macro

Dow Hits 40K, Chinese Tech Soars, Meme Stocks Plunge: Market Drivers

Dow Jones reaches 40,000 for the first time, driven by easing inflation expectations and robust corporate earnings.

By Bill Bullington

5/16, 14:09 EDT
S&P 500
iShares 20+ Year Treasury Bond ETF
iShares 7-10 Year Treasury Bond ETF
AMC Entertainment Holdings, Inc.
Coinbase Global, Inc.
Deere & Company
Walmart Inc.
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Key Takeaway

  • Dow Jones surpasses 40,000 points amid a 24% rally since October, while S&P 500 and Nasdaq 100 hit record highs.
  • Chinese tech stocks reach 15-month highs; meme stocks like GameStop and AMC see significant declines.
  • Walmart's earnings beat expectations, contributing to its strongest day in six months; energy commodities, especially natural gas, show notable price increases.

Dow Surpasses 40,000

The Dow Jones Industrial Average marked a historic milestone by crossing the 40,000 threshold for the first time, reflecting a robust 24% rally since October. This achievement underscores the market's bullish sentiment, buoyed by expectations of easing inflationary pressures and lower interest rates. The S&P 500 and Nasdaq 100 also recorded slight gains, further solidifying their positions at record highs. This rally is supported by soft economic data, including a decrease in unemployment benefit claims to 222,000 for the week ending May 11, despite being the third-highest level this year.

Economic Indicators and Market Movements

Industrial production remained unchanged in April, missing the anticipated 0.1% increase, while manufacturing production saw a 0.3% decline from the previous month, contrary to expectations of a 0.1% growth. Despite these figures, Treasury yields remained broadly steady, and the U.S. dollar index saw a minor uptick. In contrast, Chinese stocks continued their upward trajectory, and the energy sector witnessed significant movements, with U.S. Henry Hub natural gas prices increasing by 4% to $2.375/MMBTu, marking a 35% rise since the month's start.

Corporate Earnings and Sector Performance

Walmart Inc. led the gains in the Dow Jones, rallying 6.5% after surpassing revenue and earnings estimates for the last quarter, marking its strongest day in six months. Other notable movements included Deere & Co. and Coinbase Global Inc., which experienced declines following their earnings reports. The consumer staples sector outperformed, with Walmart's strong earnings contributing to a sector-wide rise of more than 1.5% during midday trading.