Posted on 05/16/24
| News Source: WSJ
The Dow Jones Industrial Average crossed 40000 for the first time, a milestone that appeared implausible little more than two years ago when the Federal Reserve began raising interest rates to cool an overheated economy.
Gloom and doom forecasts abounded. When the central bank ended the era of ultralow rates that prevailed in the years following the global financial crisis, economists predicted painful consequences: a U.S. recession and rising unemployment.
Markets shuddered. The Dow industrials and other equity benchmarks ended 2022 with their biggest declines since 2008, the year Lehman Brothers collapsed.
But as the months passed, employers kept adding jobs. People kept spending, splurging on big-ticket items like cars and blowout getaways to see Taylor Swift. Inflation kept cooling. Perhaps most important, the recession predicted by so many economists hasn’t materialized, giving investors hope that stocks might keep climbing.
“Not only didn’t we have a recession, we had a robust economy with tight labor markets, healthy consumers who were consuming,” said Katie Nixon, chief investment officer for Northern Trust Wealth Management.