(Source – Times of India)
Wall Street is buzzing with optimism as stocks continue to hit record highs, marking the best month of the year for the market. On Friday, the Dow Jones Industrial Average (^DJIA) achieved a historic milestone by closing above 40,000 for the first time. This achievement comes just 874 trading days after the Dow first closed above 30,000. The blue-chip index rose 1.2% for the week, while the S&P 500 (^GSPC) and Nasdaq (^IXIC) both logged their longest weekly winning streaks since February.
Jack Manley of JPMorgan Asset Management commented on the milestone during Yahoo Finance’s ‘Morning Brief,’ noting the positive sentiment driven by favorable macroeconomic data. Goldman Sachs (GS), Microsoft (MSFT), and UnitedHealth (UNH) were key contributors to the Dow’s rise from 30,000 to 40,000. The Dow’s composition has also changed recently, with Amazon (AMZN) replacing Walgreens (WBA), reflecting a shift in the index’s makeup.
Strategists Remain Optimistic Amid Bull Market Gains
The recent rally is viewed as a healthy sign of a bull market by many strategists. Keith Lerner, co-chief investment strategist at Truist, wrote in a note to clients that the current uptrend suggests “upside potential remains.” Similarly, Brian Belski, chief investment strategist at BMO Capital Markets, told Yahoo Finance that there is still room for growth despite potential market corrections. Belski raised his 2024 year-end forecast for the S&P 500 to a high of 5,600, noting that the fourth quarter, especially post-election, could see significant gains.
Jack Manley also sees potential for further market gains, predicting an additional 5% to 10% increase if the economy remains strong and earnings keep pace. He emphasized the importance of broader participation in the rally, not just from big tech names but across the entire index.
Earnings Drive Bull Market Sentiment
Strong earnings are bolstering the bullish sentiment on Wall Street. The S&P 500 is on track for earnings growth of 5.7%, the highest rate since Q2 2022, according to FactSet. Analysts project year-over-year earnings growth rates of 9.2% for the current quarter and 11.1% for fiscal 2024. John Porter, chief investment officer at Newton Investment Management, expects this earnings improvement to extend beyond the tech sector, leading to a more widespread rally.
The resilience of the market, even with modest expectations for rate cuts, is notable. As long as the market anticipates a future rate cut from the Federal Reserve, broad market support is likely to continue. Historical trends also support further gains, with stocks typically rising 20% on average in the year following previous milestones of 10,000, 20,000, and 30,000 for the Dow.
For investors seeking value amidst the Dow’s record run, veteran investor Jonathan Boyar shared some of his top picks on Yahoo Finance’s Opening Bid podcast, highlighting opportunities even as the market reaches new heights.
With these optimistic projections and robust earnings, Wall Street remains confident in the continued growth and resilience of the market. The shift in investor sentiment and strategic moves by companies and financial institutions signal a strong foundation for future gains, despite potential bumps along the way.
