Dow Jones closes above 40,000 for first time amid global market volatility

The Dow Jones Industrial Average achieved a historic milestone on Friday, closing above 40,000 points for the first time. This significant achievement marked the end of a record-breaking week, despite mixed performances in European and Asian markets.
"We made a breakout to new record high," Karl Haeling from LBBW told AFP. "The market is just choosing to consolidate, which is probably a healthy thing because it's racing and getting too exuberant."
The Dow rose by 0.3%, closing at 40,003.59.The S&P 500 also saw a slight increase, while the Nasdaq ended the day marginally negative.
The S&P 500, a key index for Wall Street and retirement savers, increased by 6.17 points, or 0.1%, to close at 5,303.27, just 0.1% below its record high set on Wednesday. It marked its fourth consecutive week of gains. Meanwhile, the Nasdaq Composite slipped by 12.35 points, or 0.1%, to finish at 16,685.97.
Beneath the calm surface of the indices, there was notable activity. Reddit surged by 10% following the announcement of a partnership with OpenAI, which will integrate Reddit’s content with ChatGPT and establish an advertising partnership. Wall Street's enthusiasm for artificial intelligence technology continues to grow, despite warnings of a potential bubble.
Conversely, GameStop and AMC Entertainment saw significant declines, retracting some of their earlier gains from the week. GameStop plummeted by 19.7%, reducing its weekly gain to 27.2%, after forecasting a loss of up to $37 million for the three months ending May 4. The company also announced plans to potentially sell up to 45 million shares to raise capital.
Global indices reached new heights earlier this week due to optimism about potential interest rate cuts in the U.S. and other regions, driven by lower inflation. However, European markets faced profit-taking on Friday.
"One day stock markets are making record highs and banking on rate cuts, the next stocks are giving back gains and rate cut expectations are being pared back," commented XTB analyst Kathleen Brooks.
In Asia, Shanghai's market gained 1%, and Hong Kong continued its upward trend. Chinese property developers' stocks surged after Beijing announced a reduction in the minimum down payment rate for first-time homebuyers and hinted at potential government purchases of commercial real estate.
China's real estate sector, a significant portion of its GDP, has faced considerable strain since 2020 due to tighter credit regulations aimed at reducing developer debt. This has led to declining prices and consumer hesitation in property investments, exerting pressure on the Chinese government to devise effective support measures.
Recent announcements included broad measures to support the sector, as detailed in a meeting attended by regulators, top banks, local governments, and property market representatives. Specifics on the number of houses to be purchased were not provided.
State media reported that the central bank and the National Financial Regulatory Administration would cut the minimum down payment rate for first-time homebuyers to 15%, one of the lowest rates in China’s history. The rate for second-home purchases will be reduced to 25%.
Pantheon Macro economist Duncan Wrigley reacted cautiously, stating, "China's new property support measures are helpful, but no magic bullet. The new measures are a step in the right direction and should speed up the bottoming out of upper-tier city housing markets, but the policy funding amount announced so far is disappointing and will probably need to be increased."
This week’s market movements reflect a complex global financial environment where regional developments and investor sentiments interact dynamically, highlighting the delicate balance policymakers must maintain to sustain economic growth.
(With inputs from agencies)