Dow at 50,000!
The US Dow Jones Industrials Index bucked the rout in the tech sector by reaching the 50k milestone last Friday.
In particular, the blue-chip index surged 2.5% to break the range resistance and closed at 50,115. This is the highest close ever.
While many software stocks are wilting from growing fears of Anthropic’s AI onslaught, less sexy stocks like Walmart (WMT), Exxon (XOM), Johnson and Johnson (JNJ) are rallying hard. Perhaps this is part of the cyclical sector rotation back into ‘real world’ industries.
Take a look at Johnson and Johnson’s chart. The $578-billion pharmaceutical company is taking off like a hyped-up tech stock. Prices rose four weeks in a row; and scaled new price high every other day.
Walmart remains on a firm, accelerative uptrend after touching the $1 trillion market-cap line. Just last week, Walmart added $79b to its size – the equivalent of 2x Tesco’s (TSCO) market cap (£28.8b)!
For Exxon, its chart shows a massive upside breakout this year, despite crude oil staying below $70. Perhaps investors are liking its stash of steady profits in an uncertain world.
Back to Dow. Every time an equity index advances to new highs, history tells us that this index will continue to drift higher over the short term.
There will be many buyers and momentum traders ready to join the party at fresh highs.
But, the bears would highlight the ongoing rout in many software stocks, which may drag Dow’s advance. That may be true. But I doubt the bears can contain the steep rallies in many Dow component stocks.
In sum, Dow’s impressive rally is broadcasting to the rest of the market that the US rally remains well and alive.
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