The Dow Jones industrial average crossed the 40,000 level on Thursday, May 16, for the first time and a world stock index scored a third straight record intraday high as stocks continued to rise on U.S. interest rate cut hopes and strong earnings.

The blue-chip index has recovered nearly 40 per cent from its October 2022 lows, powered by strong quarterly results and rising bets of interest rate cuts by the Federal Reserve.

“The Dow is seen as ‘Main Street America’ and media across this country and global media reference the Dow,” said Quincy Crosby, chief global strategist at LPL Financial.

“What (the 40,000 milestone) means is that regardless of the concerns about inflation and consumer sentiment, the companies in the Dow, which represent a cross-section of our economy, continue to march higher on better earnings and stronger guidance.”

All three major indexes notched record closes in the previous session after a smaller-than-expected rise in consumer inflation fueled optimism that inflation was easing after three months of hotter numbers.

The market is back to betting on two quarter-point interest rate cuts from the Federal Reserve this year, with traders seeing a 70 per cent chance of the first reduction in September, according to the CME FedWatch Tool.

On the economic front, data showed the number of Americans filing new claims for jobless benefits fell 10,000 to a seasonally adjusted 222,000 for the week ended May 11.

Inflation is still not where the Fed needs it to be, with companies in the service sector continuing to feel they have pricing power, Richmond Federal Reserve president Thomas Barkin said.

Among earnings updates, Walmart rose 5.8 per cent after the retail giant raised its fiscal 2025 sales and profit forecast, betting on easing inflation to further boost demand for essentials.

That helped consumer staples lead sectoral advances with a 1.6 per cent gain.

Deere fell 3.2 per cent after the farm equipment maker trimmed its annual profit forecast for the second time.

At 11:28 a.m. ET, the Dow Jones Industrial Average was up 112.55 points, or 0.28 per cent, at 40,020.55, the S&P 500 was up 13.11 points, or 0.25 per cent, at 5,321.26, and the Nasdaq Composite was up 35.67 points, or 0.21 per cent, at 16,778.06.

Most megacap growth and technology stocks climbed, with Nvidia leading gains.

U.S.-listed shares of Chubb added 3.6 per cent after Warren Buffett’s Berkshire Hathaway revealed a stake worth $6.7 billion in the insurer.

Popular meme stocks GameStop and AMC Entertainment slid 23.1 per cent and 13.5 per cent, respectively.

They were set to extend Wednesday’s losses that followed a two-day rally sparked by the return of “Roaring Kitty” Keith Gill, the central figure in the 2021 meme stock frenzy.

Declining issues outnumbered advancers for a 1.01-to-1 ratio on the NYSE and by a 1.03-to-1 ratio on the Nasdaq.

The S&P index recorded 53 new 52-week highs and one new low, while the Nasdaq recorded 65 new highs and 34 new lows.