![The Dow tends to breathe a sigh of relief after surpassing round numbers](https://news7g.com/wp-content/uploads/2024/05/107345851-17023093152023-12-11t154000z_1000254146_rc22v4aqan8h_rtrmadp_0_usa-stocks-780x470.jpeg)
Now that the Dow Jones Industrial Average made headlines by surpassing 40,000 for the first time on Thursday, what happens next? History shows that the 128-year average tends to retreat a bit after passing the large, round number threshold. The Dow’s ascent to largely ceremonial levels has been underpinned by broader market-supporting themes in recent months: continued enthusiasm for artificial intelligence driving gains corporate profits, optimism that inflation will continue to decline, brighten the prospect of lower interest rates (finally). The CFRA study looked at all round-number thresholds from 39,000 back to 1,000 in 1972 and found the index tended to increase a bit more after passing the 1,000-point mark before eventually coming back within 25 the next day. The average reduction is about 6%. “Large, round numbers are often a cause of concern for investors,” Sam Stovall, CFRA’s chief investment strategist, wrote in an April report predicting the Dow at 40,000. important resistance level. “History tends to confirm that markets typically pause after passing millennium milestones.” However, Stovall also notes that 64% of these declines since 1972 could be considered “noise” because the pullback was less than 5%. The data shows that “retracements” occurred 26% of the time, which equates to a decline of between 5% and 9.99%. A full correction, or drop from 10% to 19.99%, happens only 5% of the time. Bear markets that fall 20% or more also only happen 5% of the time. .DJI 1Y Mountain The 30-stock Dow surpassed the 40,000 level on Thursday after hitting the level in April. Strong earnings from economic leader Walmart briefly helped push the Dow above the 40,000 mark on Thursday before the average closed at 39,8907.88. The Dow added nearly 5.8% in 2024 through Thursday’s close, trailing gains of more than 11% in both the S&P 500 and the Nasdaq Composite. The bottom line according to the data: The Dow could gain a little more before a small pullback to start the summer.