Finance

The 30-stock benchmark broke above 40,000 for the first time.
Investors anticipate artificial intelligence boosting corporate profits and the Federal Reserve possibly cutting rates later this year.
The Dow first closed above 20,000 in early 2017, on the heels of lower corporate taxes in the U.S. under former President Donald Trump.

Traders work on the floor at the New York Stock Exchange.
Brendan McDermid | Reuters

The Dow Jones Industrial Average reached a milestone Thursday that seemed unfathomable a year ago.
The 30-stock benchmark broke above 40,000 for the first time. The move comes as investors cheer the prospects of artificial intelligence boosting corporate profits and the Federal Reserve possibly cutting rates later this year as inflation eases further from its pandemic highs.

It’s been a long and winding road for the Dow to climb to these levels. Here’s a look at the Dow’s trajectory over the past 20,000 points.

The Dow first closed above 20,000 in early 2017, as investors began pricing in lower corporate taxes in the U.S. under former President Donald Trump. Those expectations were met toward the end of that year and also drove the Dow above 25,000 by January 2018.
However, the Dow struggled in 2018 after the excitement around lower taxes faded, with trade tensions between China and the U.S. rising and the Federal Reserve raising interest rates. The Dow finished the year down more than 5%.

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In 2019, the stock market recovered as the Fed pivoted away from raising rates. By early 2020, the Dow was nearing 30,000 — reaching a high of 29,551.42 on Feb. 12, 2020.
Then came the Covid-19 pandemic. The Dow tumbled 38% from its February 2020 intraday peak to a low of 18,213.65 in March 2020.

Over the following months, the benchmark would recover as progress on Covid vaccine development ramped up and the Fed and lawmakers took unprecedented measures to support the economy. By November 2020, the Dow had closed above 30,000 for the first time.
The momentum from the Covid lows carried through to 2021, with the Dow breaking above 35,000. However, the good times wouldn’t last for much longer, as a bear market knocked the Dow all the way down to 28,660.51 before it recovered. Since reaching that low, the Dow has surged 40%.
— CNBC’s Gabriel Cortés contributed reporting. More

Walmart shopping bag is seen in Krakow, Poland on February 9, 2024.
Jakub Porzycki | Nurphoto | Getty Images

Check out the companies making headlines in premarket trading.
Under Armour — The sportswear maker’s Class A shares slumped 11% and its Class C stock fell 9% after it issued lower-than-expected full-year earnings guidance. Under Armour now expects earnings in the range of 18 cents to 21 cents while analysts polled by FactSet had forecast 59 cents.

Canada Goose — The coat maker jumped more than 12% after beating Wall Street estimates for sales and earnings in its fiscal fourth quarter. Canada Goose said one key profit margin metric “will expand by approximately 100 basis points compared to fiscal 2024” this year.
Walmart — The big-box retailer popped 4.7% after reporting adjusted first-quarter earnings of 60 cents per sharer, topping the 52 cents expected from analysts polled by LSEG. Revenue was $161.5 billion, beating the $159.5 billion consensus estimate. Walmart said it made big gains in e-commerce and won over more high-income shoppers.
Chubb — Stock in the insurance company climbed more than 8.1% before Thursday’s opening bell after Warren Buffett’s Berkshire Hathaway revealed Chubb is the secret stock the conglomerate has been accumulating. Berkshire bought nearly 26 million shares for about $6.7 billion making it the second-largest holder in Chubb, according to a regulatory filing.
Cisco Systems – The networking equipment stock gained 3% after posting stronger-than-expected fiscal third-quarter results. Cisco Systems also hiked its 2024 revenue guidance, saying it now expects revenue of $53.7 billion at the midpoint of a range.
Meme stocks — Shares of AMC and GameStop extended losses following the revival of the meme stock movement on Monday and Tuesday. Stock in movie theater chain AMC fell nearly 11% on Thursday, while GameStop pulled back roughly 14%. For the week, however, shares of AMC and GameStop have soared more than 80% and 140%, respectively.

Deere & Company — The agricultural equipment maker slipped nearly 6% after slashing its full-year outlook. Deere now forecasts net income of about $7 billion in 2024, compared to a previous estimate that called for $7.75 billion.
Baidu — Shares of the Chinese tech company were up less than 1% after releasing first-quarter results. Baidu reported CNY 31.51 billion ($4.7 billion) of revenue, topping the CNY 31.34 billion expected by analysts, according to StreetAccount.
GoodRX — The healthcare stock climbed about 6% following an upgrade to outperform from Raymond James early Thursday. Analyst John Ransom noted that he views “the growth story here favorably with potential upside to numbers” and that the company’s full-year guidance is relatively conservative.
Coupang — The Seattle-based e-commerce company rose 3.1%. UBS upgraded shares to buy from neutral, citing its “expanding portfolio and strong logistics network.”
Dell — Shares ticked up 2% after Evercore ISI raised its price target thanks to what the firm said is a broadening artificial intelligence opportunity that could include Tesla as a customer.
Meta Platforms — Shares fell 0.5% after the European Union opened a probe into Meta, centering around child safety concerns on social media platforms Facebook and Instagram.
— CNBC’s Michelle Fox, Hakyung Kim, Sarah Min, Samantha Subin and Jesse Pound contributed reporting More

Land in Shenzhen, China’s southern technology hub, is scarce. Plots in years past have grabbed sky-high prices. But when Vanke, one of the country’s largest property firms, puts 19,000 square metres of land up for sale on May 18th, it will do so at a discount of 900m yuan ($125m), or 29%, on the price it paid seven years ago. The sale reeks of desperation. Vanke has been forced to flog its assets to pay its mounting debts. The company’s struggles are another sign of the worsening situation in China’s property industry.Four years into the crisis, the potential collapse of another Chinese real-estate giant may seem unremarkable. Evergrande, the world’s most indebted homebuilder, fell in 2021. Country Garden, once China’s biggest developer, followed suit in 2023. Yet Vanke is different. Shenzhen Metro, a state-owned firm, holds about a quarter of its shares. This has given it greater access to state funds than its purely private peers. Late last year it was also included on a list of “high-quality” developers to which the government encouraged bank lending. And still the firm is short on funds to pay down debts. More

In the early 1990s India abandoned the principles of swadeshi, or self-sufficiency, that had guided its policies since independence. Subsidies were scrapped; import levies tumbled. By 2014 the average tariff had fallen to 13%, from 125% in 1991. Over the same period, exports soared.Yet the country’s exports remain a little lopsided for the tastes of Narendra Modi, who is currently seeking (and likely to obtain) a third term as prime minister. Although India is a services superpower, it plays only a small role in global manufacturing supply-chains, including for generic drugs and phones. Indeed, over the past decade, its share of global goods exports has stagnated at around 1.8%. More

Speaking in 2005, Mervyn King, then governor of the Bank of England, outlined his “Maradona theory of interest rates”. The great Argentine footballer’s performance at a World Cup match against England in 1986, Lord King argued, was the perfect illustration of how central bankers ought to conduct monetary policy. Running 60 yards from inside his own half, Maradona skipped past five opponents, including England’s goalkeeper, before slotting the ball home. Even more astonishing, he mostly ran in a straight line. By duping defenders into thinking he would change direction, he scored while scarcely having to do so. To Lord King, the lesson for central bankers was clear. Guide investors’ expectations of future interest rates deftly enough, and an inflation target can be met without changing the official rate at all.For much of the intervening period, the Maradona theory has reigned supreme. After the global financial crisis of 2007-09, and again during the covid-19 pandemic, central banks’ policy rates spent long spells close to zero, as officials sought to stimulate their economies. Unable to force short-term interest rates much lower, many plumped for a Maradona-esque solution: assuring investors that they had no intention of raising policy rates any time soon. Quantitative easing (QE) programmes, which bought large volumes of bonds with newly created reserves, reinforced this signal by ensuring central banks (or the governments indemnifying them) would take heavy losses if they raised rates. The ball hit the net, and long-term yields dropped to historic lows. More

He has a high-stakes job. War and natural disasters keep him on his toes. He is often on a plane to far-flung places, travelling to negotiate with local leaders. He has the best intelligence money can buy. And as November’s election nears, he will spend lots of time looking at lines on charts. The American president and swashbuckling oil traders, it turns out, have a lot in common.Indeed, Joe Biden also seems to have a knack for the oil trade. Two years ago his administration initiated the largest ever sell-off from America’s Strategic Petroleum Reserve (SPR), an emergency store of crude oil, to counteract price surges caused by Russia’s war in Ukraine. Back then, dwindling stocks left observers twitchy. What if there was another shock to the system? So far, however, Mr Biden has got away with the gamble. He is now refilling America’s tanks, and began a new round of bidding on May 7th. Although inflation and war have marked his presidency, domestic fuel prices have been relatively stable and American production high. More

Great investors are often known by a signature style. Warren Buffett made it big by investing in companies he thought cheap and holding on for many years. George Soros bet on macroeconomic events, at one point almost breaking the Bank of England. Jim Simons, who died on May 10th at the age of 86, was more mysterious. He plumbed the quantitative depths in often unexplainable ways.He may also have been the best of the lot. “There is one GOAT [greatest of all time]. His name was Jim Simons,” as Clifford Asness, co-founder of AQR, a hedge fund, put it to the Wall Street Journal. The flagship Medallion fund of Renaissance Technologies, Mr Simons’s firm, generated a whopping $100bn in trading profits over the three decades to 2018. Its 66% average annual return was even more astounding. No other big fund came close. More

Berkshire Hathaway has bought nearly 26 million shares of Zurich-based Chubb for a stake worth $6.7 billion.
The property and casualty insurer became Berkshire’s ninth biggest holding at the end of March.
Berkshire has been keeping this purchase secret for three quarters straight.

Warren Buffett speaks during the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska on May 4, 2024. 

Warren Buffett finally revealed his secret stock pick in a new regulatory filing, and it’s insurer Chubb.
His conglomerate Berkshire Hathaway has bought nearly 26 million shares of Zurich-based Chubb for a stake worth $6.7 billion. The property and casualty insurer became Berkshire’s ninth biggest holding at the end of March.

Shares of Chubb jumped nearly 7% in extended trading following the news of Berkshire’s stake. The stock has gained about 12% year to date.
Insurer Ace Limited acquired the original Chubb in 2016 for $29.5 billion in cash and stock, and the combined company adopted the Chubb name. Evan Greenberg, CEO of Chubb, is the son of Maurice Greenberg, the former chairman and CEO of insurance giant American International Group.

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Chubb shares over the past year.

The Omaha-based Berkshire has a large footprint in the insurance industry, from auto insurer crown jewel Geico to reinsurance giant General Re and a slew of home and life insurance services. The conglomerate also acquired insurance company Alleghany for $11.6 billion in 2022.
Berkshire recently exited positions in Markel and Globe Life in the same industry.
Mystery unveiled
Berkshire has been keeping this purchase secret for two quarters straight. Berkshire was granted confidential treatment to keep the details of one or more of its stock holdings confidential.

The topic of this mystery holding didn’t come up at the Berkshire’s annual meeting in Omaha earlier this month.
Many had speculated that the secret purchase could be a bank stock as the conglomerate’s cost basis for “banks, insurance, and finance” equity holdings jumped by $1.4 billion in the first quarter after an increased of $3.59 billion in the second half of last year, according to separate Berkshire filings.
It’s relatively rare for Berkshire to request such a treatment. The last time it kept a purchase confidential was when it bought Chevron and Verizon in 2020. More