The Dow Jones Industrial Average’s recent achievement of surpassing 40,000 points marks a significant milestone in the market’s journey. This feat, once considered improbable just a year ago, is fueled by investors’ optimism regarding artificial intelligence’s potential to enhance corporate profits and the Federal Reserve’s potential interest rate cuts in response to easing inflation.
A financial analyst observes that the Dow’s path to 40,000 has been marked by both triumphs and setbacks. The index initially crossed the 20,000 threshold in early 2017, as investors anticipated lower corporate taxes under the former presidential administration. These expectations were met by the end of that year, propelling the Dow past 25,000 in January 2018.
However, the Dow faced challenges in 2018 as the initial excitement surrounding tax cuts subsided, escalating trade tensions between China and the U.S. and the Federal Reserve’s interest rate hikes took their toll. This resulted in the Dow ending the year with a decline of over 5%.
Another market commentator notes that the stock market rebounded in 2019 as the Fed shifted away from raising interest rates. By early 2020, the Dow was approaching 30,000, peaking at 29,551.42 on February 12th. However, the onset of the COVID-19 pandemic triggered a sharp 38% decline from this intraday high to a low of 18,213.65 in March 2020.
In the subsequent months, the Dow recovered as progress was made in COVID-19 vaccine development and both the Federal Reserve and lawmakers implemented unprecedented measures to support the economy. By November 2020, the Dow had closed above 30,000 for the first time.
The momentum from the COVID-19 lows continued into 2021, with the Dow breaching 35,000. Nevertheless, this period of growth was short-lived as a bear market drove the Dow down to 28,660.51 before it ultimately rebounded. Since reaching that low point, the Dow has experienced a remarkable 40% surge.
This visual representation of the Dow’s path over the past 20,000 points illustrates the market’s resilience and adaptability in the face of various challenges. It also highlights the significant impact of both domestic and global events on the Dow’s trajectory. As the market continues to adapt to the ever-changing economic environment, it remains to be seen what new milestones the Dow will achieve in the future.