Key Takeaways

  • The Dow Jones inched past 38,000 points ahead of earnings reports
  • Hopes remain high for rate cuts on better-than-expected economic data

Looking Up

History was made on Wall Street when the Dow Jones Industrial Average and the S&P 500 closed Monday’s session at all-time highs. The Dow Jones rose 0.4%, logging 38,000 points and a new milestone for the blue-chip index. The broad-based S&P 500 trotted close behind, increasing 0.21% to end the day at 4,850.43, a fresh record in its own right.

Investors are buoyed by expectations that the US economy is on its way to a soft-landing, avoiding a recession in its effort to cool down from elevated inflation levels, in turn propelling the US indices. 

Despite the optimism, it seems the dream of an interest rate cut from the Federal Reserve is slipping further and further away. According to the CME FedWatch tool, less than 3% of polled participants believe the central bank will move away from its benchmark interest rate of 5.25% – 5.50% at its next policy-setting meeting, on deck for January 30 – 31.

Earnings Excitement

On top of the record-setting highs of its peers, the tech-heavy Nasdaq notched a 0.32% gain ahead of eagerly awaited technology earnings reports from the likes of streaming giant Netflix and electric automaker Tesla. 

Last year, it was clear that markets were excited about more artificial intelligence innovation coming into 2024, locking in some AI-powered gains – and it seems that sentiment hasn’t changed. The enthusiasm surrounding generative AI continues to grow, and eager investors will be watching the upcoming earnings reports from the “Magnificent Seven” closely for further insight, with Microsoft announcing fourth-quarter earnings after market close next Tuesday. 

Overall, market sentiment is positive, however, it’s important to consider the overall market conditions before adding any asset to your portfolio. Earnings reports, especially from major market players such as Microsoft and Tesla, will likely influence market movements.