To The Moon

It seems AI fever's slightly cooling off, and now the US stock market is all about a full-blown rally. $DJIA(.DJI)$ has hit a new milestone, crossing the 40,000 mark for the first time, and this new sign is making everyone even more optimistic about the future of the US economy.

You know, these days, tech stocks have been the king of the US stock market. With the Fed constantly hiking interest rates, it's become a stage for the tech giants. While they're shining brightly, traditional companies seem a bit overshadowed.

But interestingly, among the Dow's biggest players, it wasn't tech giants like $Apple(AAPL)$ or $Microsoft(MSFT)$ that led the charge from 30,000 to 40,000. Instead, it was Wall Street heavyweight $Goldman Sachs(GS)$ !

As the Dow shot up from 30k to 40k, Goldman soared by a whopping 113%, contributing around 1,500 points to the index. And right behind them was $UnitedHealth(UNH)$ , the largest commercial health insurer in the US.

According to the index rules, in this tech-driven bull market, the Dow would definitely lag behind the $S&P 500(.SPX)$ .

Take $NVIDIA Corp(NVDA)$ for example. It's now the third-largest company in the S&P 500, but it's not even part of the Dow. The Dow's chipmaking representative is $Intel(INTC)$ , which has dropped 36% this year, in stark contrast to Nvidia's rally.

So, what does this milestone of the Dow hitting 40,000 mean? Well, it shows that the US stock market's rally has spread beyond just tech stocks. With inflation slowing down and interest rates potentially coming down, traditional industries are also seeing potential for profits.

But with the Dow on a fire-hot rally, investment banks are starting to feel "fear of heights", fearing that stock valuations are already at historic highs and there's little room for further gains.

David Kostin, the chief US equity strategist at Goldman Sachs, said the rally in US stocks is over for 2024. He sees no economic, valuation, or earnings reasons to justify the market continuing its upward momentum. And from here to the end of the year, he thinks investing in US stocks will likely yield zero returns.

Right now, the S&P 500 has hit a high of 5,300, which is already what most investment banks predicted as their target for 2024, and that's without the Fed even cutting interest rates! This unexpected surge in momentum is still driven by AI's development.

Therefore, while investment banks are cautious, they're still betting on the Fed hiking interest rates more than expected due to economic slowdown, and hoping that AI's capital expenditure momentum can be sustained.

From what we're seeing, a slowdown in the US stock market is more likely, but based on the Dow's momentum, a sharp drop seems unlikely. Let's see how it plays out!