Dow Jones eclipses 40,000 points for first time

The news: The Dow Jones Industrial Average reached an all time high on Thursday, as US blue-chip stocks continued to advance on positive inflation data.

The numbers: The index achieved the milestone in its fastest 10,000 point climb to date, surpassing its previous record high of 39,935.04 hit on Wednesday and has recovered almost 40% since its October 2022 lows.

The context: One of Wall Street’s three main indexes, the Dow Jones was first launched in 1986 and is considered a narrower equities gauge than the S&P 500 or Nasdaq 100. Where the S&P 500 is weighted by market-cap, the Dow Jones is price-weighted, meaning that changes in the highest-priced stocks have greater impact on the index level than price changes in the lower-priced stocks.

The US inflation report published Wednesday saw overall CPI climb 0.3% from the month prior and 3.4% from a year ago, with housing and fuel accounting for 70% of the increase. The cooling inflation data suggests the Federal Reserve’s efforts to keep interest rates higher are working to help inflation resume a downward trend, which would increase the likelihood of the Fed cutting rates later in the year.