The S&P 500 also hit a record high on Monday.
January 22, 2024, 4:29 p.m. ET
• 3 min reading
The Dow Jones Industrial Average closed above 38,000 points for the first time on Monday, hitting a record high and capping a steady rise dating back to last week.
The S&P 500 also hit a record high, closing at around 4,850. The tech-heavy Nasdaq rose slightly to 15,360 by Monday's close.
Major stock indexes started the year with sluggish performance but began rising in the middle of last week.
The latest rise follows an excellent performance in markets in 2023, driven in large part by optimism about the prospects of a “soft landing,” in which inflation falls to normal levels while the economy avoids recession.
Investors' enthusiasm for AI also contributed to the increase in returns.
The market rally in recent days may be due in part to some investors' expectations that the Federal Reserve will cut interest rates as early as March.
Interest rate cuts would reduce borrowing costs for consumers and businesses, potentially triggering a boost in economic activity through increased household spending and business investment.
However, the Fed risks a rise in inflation if it cuts interest rates too quickly, as stronger consumer demand could lead to an acceleration in price increases.
Federal Reserve Governor Christopher Waller said early last week that the central bank expected to cut interest rates this year but that it would not “rush” to make the decision soon. Those comments helped send Treasury yields soaring and major stock indexes falling.
However, the stock market has risen since then.
The market rally coincided with a consumer survey released Friday by the University of Michigan that showed confidence rose 13% in January, reaching its highest level since July 2021.