The Dow Ekes Out Gains. Apple Keeps $4 Trillion Market Cap in Sight.

The Dow Jones Industrial Average (DJIA) edged higher on Thursday, as investors digested new data showing a slight easing in inflation and awaited earnings reports from major retailers. The rally has pushed the index into record territory, with Apple Inc. (NASDAQ:AAPL) leading the way with its market capitalization (market cap) nearing the $4 trillion milestone.

Apple's market cap has been on a tear, driven by strong earnings and a growing ecosystem of products and services. The company's latest earnings report, released on October 25, 2024, showed quarterly revenue of $94.9 billion, up 6 percent year over year, and quarterly diluted earnings per share of $0.97, up 12 percent year over year when excluding a one-time charge (Apple's Q4 2024 Earnings Report). Analysts have been bullish on the company's prospects, with Wedbush analyst Dan Ives raising his price target to $325, a Wall Street high, and maintaining an Outperform rating on the stock (Wedbush, October 2024).

Apple's success can be attributed to its ability to innovate and maintain market dominance in the consumer electronics industry. The company's products, such as the iPhone, Apple Watch, and AirPods, have gained significant traction, with a growing active installed base of devices. Additionally, Apple's services, such as the App Store, Apple Music, iCloud, Apple TV+, Apple News+, and Apple Arcade, have been driving revenue growth and contributing to the company's market cap expansion.

The Dow's gains on Thursday come as investors digest new data showing a slight easing in inflation. The Consumer Price Index (CPI) report, released on Wednesday, showed that so-called core inflation, which strips out volatile food and fuel costs, rose by 3.6 percent on an annual basis last month, the lowest level in three years. While inflation remains well above the Fed's 2 percent target, traders were encouraged by the results, with the futures market now seeing two Fed rate cuts this year, the first most likely coming in September.

The S&P 500 is up more than 11 percent this year, blowing past most analysts' 2024 forecasts. At the start of the year, the Wall Street consensus was for inflation to steadily ease, rate cuts to start as soon as the spring, and markets to rally modestly. Stubbornly high inflation upended that prediction — yet stocks have outperformed many of even the most bullish predictions.

Strong corporate earnings have also contributed to the market's gains, despite concerns about consumers pulling back on spending. Another factor: The Fed has all but ruled out raising rates, giving investors the sense that monetary policy will be no more restrictive than it is today.

As the market awaits earnings reports from major retailers, such as Walmart, investors will be watching for signs of consumer spending trends and the impact of inflation on corporate profits. With Apple's market cap nearing the $4 trillion milestone, the company's earnings reports and guidance will continue to be a key focus for investors.

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