NEW YORK, May 17 (Reuters) - The Dow Jones Industrial

Average, a laggard among the major U.S. stock indexes

this year, got its moment in the spotlight on Thursday as it

briefly broke above 40,000 points for the first time in its

history.

The record on the Dow - as well as fresh records on the S&P

500 and Nasdaq Composite earlier this week - come

as investors grow more confident that the U.S. is heading for an

economic soft landing, where the Federal Reserve is able to tame

inflation without badly hurting growth.

A stronger-than-expected earnings season has also helped

propel stocks higher, with 77% of companies beating estimates,

compared to 67% historically, according to LSEG IBES data as of

May 10.

While Dow components are weighted in the index by their

share prices, S&P 500 stocks are weighted largely by their

market value. The relatively infrequent changes to the Dow means

it sometimes may be slower to include some of the hottest

companies.

Some $89 billion in assets is benchmarked to the Dow,

compared to $11.45 trillion pegged to the S&P 500, according to

the S&P Dow Jones Indices annual survey of assets as of December

2023.

Still, the price-weighted index retains cultural cache:

established in 1896, it is far older than the S&P 500, which was

launched in 1957 and the Nasdaq, which was launched in 1971. The

Dow outperformed the S&P 500 in eight of the last 20 years. This

year, it is up 5.8%, compared to the S&P 500's 11.1%

year-to-date gain and the Nasdaq's 11.2% rise.

"The Dow is America's index," said Quincy Krosby, chief

global strategist at LPL Financial. "It has been slighted by the

professionals, but the Dow is enduring and it represents Main

Street America,"

The index closed at 39,869.38 on Thursday after reversing in

afternoon trading.

Past 10,000-level milestones in the Dow have been followed

by accelerated gains in the index, though market participants

say it is difficult to pinpoint a reason for the momentum.

The Dow has notched an average gain of 4.3% in the month

after crossing a 10,000 point milestone. That's well above the

index's average rolling one-month gain of 0.57% since May 1896.

"Breaking the 40,000 barrier is a big psychological boost

for the bulls as round numbers hold special significance in

people's hearts and minds," Chris Zaccarelli, chief investment

officer at Independent Advisor Alliance said in a note.

The most recent milestone comes a little more than three

years after the index hit 30,000 points, a period marked by big

market swings as investors grappled with the aftermath of the

COVID-19 pandemic, surging inflation and the interest rate

increases by the Fed to combat rising consumer prices.

The composition of the Dow can contrast markedly from that

of the S&P 500 due to the different methods by which the indexes

select and weight their constituents.

For example, the top weight in the Dow as of Wednesday's

close, UnitedHealth Group ( UNH ), is only the 13th most heavily

weighted stock in the S&P 500. The Dow's second-biggest

weighting, Goldman Sachs ( GS ), does not make the S&P 500's top

50.

By contrast, three of the top six weights in the S&P 500 -

Nvidia ( NVDA ), Alphabet and Meta Platforms ( META )

- are not in the Dow.

The Dow's journey from 30,000 to 40,000 points has been

marked by a wide gap between the index's best and worst

performing stocks. Top performers include American Express ( AXP )

, Caterpillar ( CAT ) and Microsoft ( MSFT ), whose

shares have all roughly doubled in value since November 2020,

when the Dow first touched 30,000.

Bringing up the rear are Verizon, Nike ( NKE ) and

Intel ( INTC ), which have shed around a third of their value

over that period.