The Dow Jones Industrial Average touched the 40,000 mark and refused to give back recent gains Thursday. Some blue chips led the stock market today as Walmart broke out on solid earnings. But the Nasdaq and S&P 500 closed lower. Chubb climbed sharply as it became the latest major Warren Buffett holding.
The Dow crossed the 40,000 mark several times throughout the morning as it lifted marginally after rallying 0.9% on Wednesday. On Thursday, it hit 40,051 intraday, aiming for its 11th rise in 12 sessions. The popular blue chip index closed the trading session down 38 points, or only 0.1%, at 39,869. The Dow has gained 6.3% so far in 2024.
The Dow's move came one day after a rally spurred a boost in Investor's Business Daily's suggested exposure to stocks. Some market observers highlighted the positive impact that artificial intelligence — in addition to a growing economy and healthy corporate earnings — is having on the market.
"We are living through the fourth innovation boom since the 1960s tied to AI, automation and profitability," Scott Helfstein, head of investment strategy at Global X, wrote in an email sent to IBD. "Those booms worked out well for companies and stocks in the past. Expansion to new highs usually lasts two years and delivers returns of 50%."
AI and data-center-related companies including Super Micro Computer, Dell Technologies and Microsoft backtracked in reasonable form after posting big gains on Wednesday. These companies got some airtime during Thursday's IBD Live show.
Stock Market Today: Transport Stocks Trim Losses
The Dow Jones Transportation Average, which lagged the major indexes on Wednesday, fell as much as 0.5% early Thursday. But the index nearly wiped away those losses to edge slightly lower.
Dow Jones Market Data found that the biggest contributors to the Dow industrials' rise from 30,000 to 40,000 included Goldman Sachs, Microsoft, IBD Long-Term Leaders name UnitedHealth and Caterpillar. Each of these components contributed 1,200 points or more.
Keep in mind that the Dow Jones Industrial Average is a price-weighted index, not market cap-weighted.
Meanwhile, the Nasdaq composite edged 0.3% lower. The S&P 500 closed off 0.2% at 5,297. Both raced to all-time highs on Wednesday following an inflation report that showed U.S. consumer prices did not continue to accelerate.
The Russell 2000 fell 0.6% after big gains in the prior three sessions. The S&P MidCap 400 eased 0.9%. Both indexes hold comfortably above their 50-day moving averages.
Volume bulged vs. the same time Wednesday on the Nasdaq and fell on the New York Stock Exchange. Keep in mind that meme stocks have had a huge impact on volume totals this week.
In other financial markets, crude oil futures rose 0.9% to $79.29 a barrel while natural gas surged 3%. Gasoline futures rallied 1.7% while gold edged 0.4% lower to $2,382 per ounce.
A Perfect Breakout By This Leading Growth Stock; How To Use IBD Screener To Find Others
Retailer Breaks Out In Stock Market Today
Walmart added fuel to the bullish story in stocks with solid growth in same-store sales. The company also reported solid year-over-year increases in other segments such as digital ads and global e-commerce.
Walmart blasted 7% higher to top a double-bottom chart pattern with a 60.89 entry. Earnings in the April-ended fiscal first quarter jumped 22% to 60 cents a share on a 6% pickup in total sales.
Growth investors generally prefer companies in the large-cap and megacap arena that can grow their profits at a faster rate than sales. This implies firm pricing power or the ability to reduce costs, boosting margins.
Walmart is "the perfect example of our investing theme of old economy companies who have pivoted to digitization, generative AI, robotics, and cloud computing," Nancy Tengler, chief investment officer at Laffer Tengler Investments, wrote in an email sent to IBD. Tengler added that Walmart's decision to raise its dividend 9% was an unusually bullish move.
Insurance Sector Leader A New Buffett Holding
Insurance giant Chubb became the latest major Warren Buffett holding, according to filings with the Securities and Exchange Commission. Chubb shares jumped nearly 5% as volume surged 208% above the stock's 50-day moving average.
One of the day's early big movers, Chubb also surged above a 260.58 proper buy point in a nine-week flat base. The 5% buy zone goes up to 273.61.
The company has enjoyed stout profit gains amid an industry that has sharply raised premiums. Chubb's earnings have grown 17%, 58%, 108% and 23% vs. year-ago levels in the past four quarters. MarketWatch reported that Buffett's holding company, Berkshire Hathaway, owned 25.9 million Chubb shares as of March 31.
However, Wall Street expects the insurer, now based in Switzerland, to see a 4% decline in earnings this year to $21.67 a share.
Bloomberg Intelligence reported that Buffett may have been attracted to Chubb's sizable reinsurance business.
According to IBD Stock Checkup, Chubb holds a respectable 91 Composite Rating out of a best-possible 99.
Stock Market Today: Deere, Dillard's Fall
Meanwhile, some individual companies including Deere and Dillard's fell due to disappointing quarterly reports.
Farm equipment supplier Deere sank more than 4% and dipped below 400 in heavy turnover. The stock tried to pass a 414.80 buy point within a long, winding base. Deere shares are trying to gain support at the 50-day moving average. Volume zoomed three times the stock's typical level.
Deere beat reduced top- and bottom-line views but issued a soft outlook.
Dillard's fell 4.7% and crossed below 440 in heavy volume. Earnings fell 6% to $11.09 a share on a 4% dip in sales to $1.55 billion. The department store chain, primarily located in the South, nevertheless is building a new base with a 476.48 correct buy point.
Building and road construction-related firms also fell en masse. For sure, such stocks have made strong runs in recent years. Eagle Materials dropped 5.8% in above-average volume. Before the pullback, the gypsum and cement supplier had achieved a 36% gain year-to-date and attempted a breakout from a narrow base with a 272.72 buy point.
Now, Eagle is testing critical support at the 50-day moving average. Irish asphalt and cement firm CRH dropped more than 3%, losing much of its gain over the prior two sessions.
Earnings After The Close
After the close, Applied Materials reported earnings above Wall Street's estimates. The stock climbed 2% in extended trading.
Salvaged car auctioneer Copart fell 1% in after-hours trading following its April-quarter earnings announcement.
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