The Dow, up roughly 6 per cent for the year, has rallied in recent weeks as cooler-than-expected inflation data has investors more optimistic that a soft landing, or no recession, could be in the cards for the economy.
That, in turn, has spurred investors to snap up shares of cyclical stocks, or shares of companies that are sensitive to the economy, CNN reported.
The Dow slipped on Thursday, snapping a 13-day winning streak.
The blue-chip index fell 237 points after being on track to close higher for a 14th consecutive session. That would have marked the Dow’s longest run of consecutive gains since May 1897, CNN reported.
If the Dow had closed higher Thursday and Friday, it would have notched 15 days of gains, its longest daily winning streak ever.
On Wednesday it notched its 13th straight day of gains, its best winning streak since 1987 and its highest level since February 2022, CNN reported.
Cyclical stocks that tend to rise and fall with the economy are rallying, the latest sign that investors are becoming more optimistic about the possibility of a “soft landing”, i.e. no recession.
The Dow Jones Industrial Average index has gained 3.2 per cent this month, outperforming the S&P 500 and Nasdaq Composite, CNN reported.
The Dow’s gains suggest that investors are starting to buy more economically sensitive stocks as recent data show inflation slowing.
That, in turn, indicates they’re becoming increasingly optimistic that the economy could avoid a recession, CNN reported.
Solid economic growth in France and Spain, and a very modest recovery in Germany could be enough to confirm that the euro area has already exited a recession that started in the final quarter of 2022.
Official data showed that French GDP was up 0.5 per cent in the April-June period, compared with the first quarter of 2023, driven by a strong performance in foreign trade, CNN reported.