Financial markets/economy

Dow Jones breaks through 40,000 points: but many other asset classes also rise

Posted by MoneyController on 17.05.2024

The Dow Jones index broke a new all-time high and broke a psychological threshold, but many other asset classes are also in a bullish phase. In general, markets, especially in the US, are characterised by prevailing optimism. But what are the prospects for the US economy in the coming months?

An across-the-board bull phase

In addition to having broken its own all-time record, the Dow Jones crossed the (psychological) 40,000-point threshold. And yet, as Gregory Zuckerman and Gunjan Banerji write in the ‘Wall Street Journal’, it is not only one of the three major US indices that is going through a bullish phase: the prices of precious metals, technology stocks and speculative assets such as cryptocurrencies are also rising, but also the yields of banking or savings products (certificates of deposit, for example), as well as fixed income coupons.

What makes markets optimistic?

As Zuckerman and Banerji write, the performance of the index and, more generally, of the US stock markets can be explained by a number of circumstances: the expectation of the (albeit so far postponed) cut in interest rates, the enthusiasm in the stock market for stocks related to artificial intelligence, the success of a new class of anti-obesity drugs and the process of reindustrialisation; as Gary Cohn, vice chairman of IBM, explains, a fundamental change in the economy is taking place in the US: namely, an increasing number of investments, oriented towards the long term.

Some elements of weakness

Market sentiment is therefore decidedly bullish today, but there are some elements that could dampen market enthusiasm. Firstly, there are interest rates, which weigh on both the refinancing of US debt and on borrowing and mortgage costs, while house prices continue to rise. Secondly (as noted by the Fed Open Market Committee, also in the WSJ), consumers' savings are increasingly shrinking, as indicated by credit-card consumption and the buy-now-pay-later system.

Read also:

US inflation slowdown and market euphoria

High-Yield risky, but attracts investors with yields as high as 9%

Stock markets back on top: what is behind the new record highs?

TODAY’S MOST READ ARTICLES

24.06.2024 posted by WisdomTree

Hidden powerhouses: The role of iridium and rare earth elements in the energy transition

Continue reading

MOST READ ARTICLES OF THE WEEK

18.06.2024 posted by MoneyController

Focus China: from Warren Buffett's moves on the property market to the hunger for offshore investment

Continue reading

MOST READ ARTICLES OF THE MONTH

MOST READ ARTICLES IN THE FINANCIAL FORUM

View classification