Dow Jones Industrial Average crosses 40,000 points for first time

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NEW YORK (AP) — The Dow Jones Industrial Average topped the 40,000 level for the first time Thursday, as U.S. stocks drifted higher to add to their records set a day before.

The Dow was up 115 points, or 0.3%, at 40,023, in midday trading. It made its last leap of 10,000 points in about three and a half years, as the U.S. economy and corporate profits crawled out of the crash caused COVID-19 and continued to hold up so far despite the worst inflation in decades and the punishing effect of high interest rates.

The S&P 500 index, which is much more widely followed on Wall Street and dictates the performance of many more 401(k) accounts than the Dow, was 0.3% higher, as of 11:10 a.m. Eastern time. The Nasdaq composite was also up 0.3%. All three indexes had rallied on Wednesday.

Walmart rose 5.9% after reporting stronger profit for the latest quarter than analysts expected. It also said its revenue for the year could top the forecasted range it had earlier given. That could be an encouraging signal for the broader economy, as worries have risen about whether U.S. households can keep up with still-high inflation and more expensive credit-card payments.

Target, which reports its quarterly results next week, was also rising, along with other retailers like Dollar General and Dollar Tree. All added at least 2%.

Chubb climbed 3.4% after Warren Buffett’s Berkshire Hathaway disclosed it had built an ownership stake in the insurer.

Stronger-than-expected profit reports have been one of the main reasons U.S. stock indexes jumped through May to records following their tough April. Another has been revived hopes that the Federal Reserve will be able to cut its main interest rate at least once or twice this year.

A string of worse-than-expected reports on inflation at the start of the year had put the potential for such cuts in jeopardy, but some more encouraging data has since arrived.

Treasury yields have eased in May as hopes rose that the economy could hit the hoped-for sweet spot, where it cools enough to stifle high inflation but not so much that it causes a bad recession. Yields were holding relatively steady Thursday following some mixed data on the economy.

One report showed slightly more workers applied for unemployment benefits last week than economists expected, though the number remains low compared with history. Others said homebuilders broke ground on fewer projects last month than expected, manufacturing growth in the mid-Atlantic region was weaker than hoped and import prices rose more than forecast.

“Today’s numbers were in line with the overall theme of the week—nothing dramatic, but showing signs of a steady-to-cooling economy,” said Chris Larkin, managing director, trading and investing, at E-Trade from Morgan Stanley.

The yield on the 10-year Treasury was holding steady at 4.35%. The two-year yield, which moves more closely with expectations for action by the Fed, rose to 4.77% from 4.72% late Wednesday.

On the losing end of Wall Street, Deere fell 2.1% despite reporting stronger profit for its latest quarter than expected. It cut its forecast for profit over the full fiscal year below analysts’ estimates, as farmers buy fewer tractors and other equipment.

Homebuilders fell following the weaker-than-expected report on housing starts. They gave back some of their big gains the day before, when hopes for lower mortgage rates had sent them sharply higher. Lennar fell 2.1%, and D.R. Horton slipped 1.8%.

GameStop and AMC Entertainment were also sliding for a second straight day, pulling back further from their jaw-dropping starts to the week. They’ve been moving more on excitement drummed up by investors than any changes to their financial prospects.

GameStop fell 17.5%, though it’s still up 86% for the week so far. AMC Entertainment lost 11.1%.

Under Armour swung from an early loss to a slight gain after it warned that its revenue will be likely down by “a low double-digit percentage rate” this upcoming fiscal year, citing weaker demand from wholesalers and “inconsistent execution across our business.” The company announced a restructuring plan to cut costs and also announced a program to buy back up to $500 million of its stock. It was up 0.3%.

In stock markets abroad, indexes were modestly lower in much of Europe after mostly rising in Asia. Hong Kong’s Hang Seng jumped 1.6% after reopening following a holiday, while Japan’s Nikkei 225 rose 1.4%.

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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.