Goldman Sachs, Microsoft, others push Dow to 40,000 mark

Dow Jones claim to 40,000 fame comes on the back of positive US macro-economic data and rising hopes for interest rate cuts

Since November 24, 2020, when the Dow Jones Industrial Average reached the 30,000 mark, Goldman Sachs, Microsoft, UnitedHealth, Caterpillar, and American Express have surged up to 100 percent, significantly outperforming the 30-stock index, which gained over 32 percent in that time.

Given the strong balance sheets post-Covid, the Dow took nearly 3.5 years to climb from the 30,000 to the 40,000 mark. During this period, these five stocks were among the top contributors to the index, according to data compiled by Bloomberg.

The Dow's climb to  40,000 comes on the back of positive US macro-economic data and rising hope of interest rate cuts. The cooling inflation print in April, at 3.4 percent, came after four consecutive hotter-than-expected reports, marking the first easing of 2024. Moreover, a decline in the unemployment claims data also helped revive market sentiment, as it signalled a tight labour market.

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As a result, traders started to price in a 70 percent likelihood of an interest rate cut in September 2024, according to the CME-FedWatch tool.

Goldman Sachs contributed the most to Dow Jones' move from 30,000 to 40,000. The company has seen its revenues grow  8 percent since FY20, but profit before provisions dwindled 28 percent during the same period, according to Bloomberg data.

Microsoft Corporation, the second highest contributor to the Dow's 10,000-point ascent, saw its revenues grow 65 percent, while gross profit jumped 70 percent since FY20. The company's earnings per share (EPS) stood at $11.56 in the quarter ended March 2024, up from $5.8 in FY20.

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The third-highest Dow Jones contributor, Caterpillar  Inc, which manufactures construction and mining equipment, has seen its revenues rise 60 percent since FY20, while gross profit has jumped a whopping 90 percent. The company's EPS stood at $22.07 in the March 2024 quarter, up from $6.8 in FY20

Health insurance and services company, the United Health Group, saw its revenues rising 47 percent in four years, while gross profits rose 36 percent during the same period. The company's EPS stood at $24.5 in the quarter ending in March 2024, up from $16.03 in FY20.