Dow Jones scales record high on hopes of Fed rate cuts, trade deals

The Dow Jones Industrial Average hit an all-time intraday high on Friday, making it the last of the three major US indexes to clinch a record in Wall Street's rally fueled by the prospect of a looser monetary policy, easing trade tensions and upbeat corporate earnings. 

The Dow briefly surpassed the previous peak of 45,073.63 touched on December 4, helped by a 9.5 per cent jump in UnitedHealth Group shares after Warren Buffett's Berkshire Hathaway revealed a new investment in the health insurer. 

It was last up 0.3 per cent at 45,062 points. 

Counted among the oldest and most followed indexes, the Dow tracks the performance of 30 US-listed large-cap stocks. 

"We have certainly waited a long time this year for the Dow Jones industrial average to catch up and join the new high club with the Nasdaq and the S&P," said Art Hogan, chief market strategist at B. Riley Wealth. 

The blue-chip index is price-weighted rather than market-cap-weighted, differentiating it from indexes such as the S&P 500, for which companies with larger market values carry the most weight. 

The Dow's gains have been propelled by a solid year-to-date performances from Wall Street bank Goldman Sachs, tech giant Microsoft and industrial equipment maker Caterpillar. 

Chip designer and AI champion Nvidia, which became the first publicly listed company to clinch $4 trillion in market capitalization, has also aided the Dow's rise. The stock has gained more than 30 per cent this year. 

The S&P 500 and the Nasdaq Composite reached all-time highs late June, thanks to renewed AI enthusiasm, hopes of US trade deals and rising bets on interest rate cuts, which helped drive a turnaround in US stocks from a sharp rout earlier this year. 

The Dow, however, has lagged in reaching record highs, as limited exposure to AI names and the underperformance of companies such as UnitedHealth Group and Salesforce restricted its overall increase. 

"Dow Jones has lagged the overall market because it has a lot of value companies in there, and this has not been a value market," said Dennis Dick, chief strategist at Stock Trader Network. 

The blue-chip index has jumped more than 20 per cent since hitting this year's lowest in April when US President Donald Trump announced sweeping "reciprocal tariffs" to rebalance the global trade order in favor of the United States. 

After a series of US trade agreements with the UK, Japan, and the European Union, investors are certain that a worst-case global recession scenario can be avoided. 

Meanwhile, a weak labor market report for July prompted traders to increase their bets on an interest rate cut as early as September. 

Trump's moves to shake up the Federal Reserve leadership - including an interim pick for a Fed governor post and an expanded search to replace Chair Jerome Powell next year with someone willing to lower interest rates - have also added to rate cut bets. 

Health insurer UnitedHealth has been the biggest drag on the index. The company's stock has dropped more than 41 per cent so far in 2025. 

Disappointing earnings, elevated medical costs, CEO Andrew Witty's abrupt departure, and an ongoing US Department of Justice criminal investigation have contributed to a steep decline in its stock price. 

The Dow has risen nearly 6 per cent so far this year. In comparison, the S&P 500 and the Nasdaq have risen about 10 per cent and more than 12 per cent, respectively. 

Other notable contributors in the Dow's rise this year include major lender JPMorgan Chase and planemaker Boeing, which have risen about 22.6 per cent and 31.6 per cent, respectively, so far this year.