The Dow Jones industrial average briefly passed 40,000 points for the first time on Thursday, powered by strong quarterly results from corporate America and rising bets of interest-rate cuts by the Federal Reserve.

The uptick was short-lived, though, as the Dow closed slightly down from earlier in the day. The index closed at 39,869 – just under the 40,000 benchmark it surpassed earlier in the day.

Still, the rally shows resilience in the US economy as the index has more than doubled since the spring of 2020 when the World Health Organization declared Covid-19 to be a global pandemic. The outbreak shuttered businesses worldwide as the death toll mounted. In its wake came supply chain issues that led to soaring inflation.

The US has staged a remarkable recovery despite widespread predictions of disaster in the face of runaway prices and the Federal Reserve’s aggressive series of interest rate hikes, aimed at tamping down inflation.

On Wednesday, government figures showed that the annual rate of inflation, which peaked at over 9% in June 2022, had slowed to 3.4% in April, down from 3.5% in the previous month.

The rate is still far higher than the Fed’s target of 2% annual inflation but the details in the report cheered investors and increased expectations that the Fed will start cutting interest rates later this year.

The Dow is an index of 30 of the US’s most prominent companies, including Amazon, Apple, McDonald’s and Nike. Hopes that artificial intelligence will create a new wave of tech innovation – and wealth – and a series of positive reports from Dow constituents have pushed up the index.

On Thursday another of its constituents, the retail giant Walmart, released better than expected quarterly results, helping the Dow break the 40,000 barrier.

John Lynch, chief investment officer at Comerica Wealth Management, hailed the Dow’s drive to 40,000 points, telling CNBC: “This achievement is a testament to the powers of capital formation, innovation, profit growth and economic resilience.”

The stock market rise comes as the US has continued to report strong growth in the jobs market. Unemployment has remained below 4% for over two years – the longest such streak since the 1950s.

But despite rising stock markets and low unemployment, consumer confidence has sagged, plunging to its lowest level in six months according to a University of Michigan survey of consumers released earlier this month.

“While consumers had been reserving judgment for the past few months, they now perceive negative developments on a number of dimensions. They expressed worries that inflation, unemployment and interest rates may all be moving in an unfavorable direction in the year ahead,” said the University of Michigan’s surveys of consumers director, Joanne Hsu.

The split between poor consumer sentiment and buoyant economic indicators has presented Joe Biden with a major obstacle ahead of November’s election. Polling has consistently shown voters regard his predecessor, Donald Trump, as a better economic leader than Biden.

The Biden campaign took to X to poke fun at Trump, who has claimed on numerous occasions that stock markets and the wider economy would crash under Biden.