Dow 40K                         


By Isaac Cohen*

For the first time in 128 years, last Friday, the Dow Jones Industrial Average closed above 40,000 points, responding to the positive news that the consumer price index, excluding volatile food and fuel, decreased to 3.5 percent in April from a year earlier, slightly less than 3.6 percent in March. The reason for the market optimism was because the price index revealed an interruption in an increasing inflationary trend, registered during the first quarter of this year. Additionally, the strength of the economy, as indicated for instance by unemployment under 4 percent, together with the enthusiasm generated by the adoption of artificial intelligence technologies, have contributed to the stock market rally. All this, despite the restrictive monetary policy which has pushed the federal funds interest rate to over 5 percent.

Out of the Dow Jones list of thirty members, the top five main contributors to the 40K Dow were led by the financial titan Goldman Sachs. In second place was Microsoft, one of the principal protagonists of the adoption of artificial intelligence technologies, with both followed by United Health, Caterpillar and American Express. The recent addition last February of Amazon, another high-tech company, to the Dow Jones list of thirty members will make the index respond even more to technological advances.

*International analyst and consultant, former Director ECLAC Washington. Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media.


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