It climbed higher the following day to 36,952.65, but eventually closed below its all-time high. Take a look at the Dow Jones Industrial Average over the course of its history and you also have a reliable history of the U.S. stock market. Its peaks and valleys shed light on the workings — and volatility — of the global economy. Confidence that a recession could be averted continued into 2024. The Dow climbed above 38,000 in January 2024 and reached 40,000 by May.
Actual investment return and principal value is likely to fluctuate and may depreciate in value when redeemed. Liquidity and distributions are not guaranteed, and are subject to availability at the discretion of the Third Party Fund. Given its large-cap focus, the roster of companies included in the Dow fails to include companies of other sizes. Many market observers think the S&P 500 is a much better representation of the economy, as it includes 500 companies and draws more widely from different sectors.
Dow approaches new record and S&P hits all-time high after stronger-than-expected jobs data
The index peaked again in July, almost reaching 42,000, then rallied in September when the Fed started cutting interest rates for the first time since 2020. “Regardless of the news, the market came into this week trading very extended,” writes Bespoke Investment Group’s Justin Walters. The Fed cut interest rates twice in late 2024 following a historic series of rate hikes to cool inflation. The PCE was as high as 7.2% in 2022 while the more commonly used consumer price index hit 9.1%.
- Because of the price-weighted calculation method, a $1 change in the price of a stock in the DJIA doesn’t equate to one point in the index since that depends on the Dow divisor at the time.
- It’s been struggling with an identity crisis fueled by uncertainty about Ethereum’s value proposition and weaker revenue since its last big technical upgrade and increasing competition from Solana.
- The market fell more than 50% in just a year and a half, due to the subprime mortgage and credit crisis that kicked off the Great Recession.
- The Federal Reserve began buying banks’ mortgages as they recognized that banks did not have adequate liquidity.
- Admittedly the steady hands of the Federal Reserve chairs during those eras likely had greater sway over the success of the markets than whoever was in the White House.
- The Fed’s rate-cutting path has come under increased scrutiny in recent weeks as Trump has continued a tirade against Fed Chair Jerome Powell, lashing out at him for holding rates steady.
Companies are chosen based on their reputation, growth, and relevance to the economy, with the aim of reflecting the overall health and trends of the industrial sector of the U.S. economy. Uncertainty had been hanging over the markets because of the unprecedented refusal of the outgoing president, Donald Trump, to concede the election to President-elect Biden. When Trump began the transition process late in November, 2020, stocks roared back. Many records were set in 2019, thanks partly to trade talks with China that boosted firms in the index.
What has been the Dow’s largest, single-day point gain?
- It hit a milestone on July 11, closing above 27,000, and then another on Nov. 15, closing above 28,000 (in the chart below, milestones are noted).
- Take a look at the Dow Jones Industrial Average over the course of its history and you also have a reliable history of the U.S. stock market.
- Tech stocks Nvidia and Apple also caught a bid after the post.
- The Dow lost more than 22% in a single day on Black Monday.
We’ve included a few key shocks to the stock markets along these timelines in addition to the presidents who were in office. Admittedly the steady hands of the Federal Reserve chairs during those eras likely had greater sway over the success of the markets than whoever was in the White House. As of March 2022, the Dow Jones’s all-time high at market close was 36,799.65, which took place two months earlier, on Jan. 4, 2022.
Stock futures are little changed
ETH ETFs came back to life in June after much concern they were becoming zombie funds. A spot in the index is now open after Hewlett Packard Enterprise closed its acquisition of Juniper Networks. Gordon Haskett analyst Don Bilson said in a note to clients that Robinhood seems to be one of the leading candidates to join the index. Emmanuel Cau, head of European equity strategy at Barclays, said the STOXX Europe 600 could soon break out to new highs.
Record Highs Set in 2017
Many prefer the S&P 500, a broader index with 500 companies, as a more comprehensive economic indicator. Since the Dow tracks just 30 large-cap U.S. companies, some critics argue that it is too narrow to represent the state of the overall U.S. economy. Given its exclusively large-cap focus, the roster of companies included in the Dow fails to include companies of other sizes.
The labor market continues to prove resilient, which gives the Fed more time to hold rates steady and focus on how inflation is developing. The Dow Jones industrial average finished above 40,000 for the first time on Friday afternoon, doubling where the index hit shortly after Donald Trump became the 45th president. Many were buying stocks on margin—the practice of buying an asset where the buyer pays only a percentage of the asset’s value and borrows the rest from the bank or a broker. Margin credit rose from 12% of NYSE market value in 1917 to 20% in 1929. The Dow tracks 30 large, publicly owned blue-chip companies trading on the New York Stock Exchange and the Nasdaq. The selection is not based on strict quantitative criteria but rather on the decisions of the editors of the Wall Street Journal.
Selling picked up after Trump posted several letters to world leaders promising tariffs ranging from 25% to 40% starting on Aug. 1 if they do not make a deal in the meantime. The U.S. has 10% baseline tariffs on all imported goods, along with higher rates for Chinese goods and other import taxes on steel and autos. The economy and consumers have remained somewhat resilient under those tariffs, though analysts and economists expect to see the impact grow as import taxes continue to work their way through businesses to consumers. Inflation remains a big concern for businesses and consumers. Trump’s on-again-off-again tariff policy has made it difficult for companies to make forecasts.
Currency Crisis
The index is maintained by S&P Dow Jones Indices, an entity majority-owned by S&P Global. The ten components with the largest dividend yields are commonly referred to as the Dogs of the Dow. As with all stock prices, the prices of the constituent stocks and consequently the value of the index itself are affected by the performance of the respective companies as well as macroeconomic factors. The Dow was volatile in 2015 because it was based on just a few companies.
Fed funds futures traders advanced candlestick patterns are currently pricing in a roughly 95% chance that the central bank will hold rates steady at its meeting later this month, per CME Group’s FedWatch tool. On that day, it closed at 7,286.27, a 37.8% decline from its peak. No one knew if a new bull market had begun until the Dow hit a higher low on March 11, 2003, closing at 7,524.06. The move to new records for stocks on Thursday signals a key shift among investors, who have often digested strong economic data as a negative development, as it lowers the chances for a rate cut. “A few Fed speakers have shown their inclination to cutting interest rates as early as this month. The largest single-day drop, percentage-wise, that the Dow has had occurred when the market crashed on Oct. 19, 1987, Black Monday.
Tech stocks Nvidia and Apple also caught a bid after the post. Of course, the index, which has been rangebound since February, has a number of challenges ahead of it, including ongoing tariff uncertainty and any fallout from the massive U.S. federal spending bill. But Cau said the risk/return profile is more attractive, now that uncertainty has likely peaked. A lower bar to clear for earnings and an accommodative central bank should also help European stocks. The Dow Jones Industrial Average (DJIA), Dow Jones, or simply the Dow (/ˈdaʊ/), is a stock market index of 30 prominent companies listed on stock exchanges in the United States. The Dow’s activity broke new records in terms of downward movement in 2009.
The Dow experiences its largest single-day percentage drop of 22.6% on Oct. 19,1987. This so-called Black Monday crash is caused in part by computer trading that forces sell orders when the market trends down. The Dow rises 19.2% during a post-war recession thanks to strong business spending, even after a decrease in government wartime spending. While you can’t directly buy shares in the market index, you can invest in the DJIA through index funds and exchange-traded funds (ETFs) such as the SPDR Dow Jones Industrial Average ETF Trust (DIA). These funds track the DJIA through a similar composition and weighting of stocks.