Previously, the Dow had fallen from 11,723 in January 2000 to 9,389 in March 2001, dropping 20% (from 20,520 to 16,434 points, inflation-adjusted). The bout of inflation that followed the COVID-19 pandemic led to another sharp sell-off in 2022. Between Jan. 7, 2022, and Sept. 30, 2022, the Dow declined from 36,231.66 to 28,725.51.
Dow Jones Industrial Average (DJIA) Index Components
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 records set in the fall were the first ones since the Dow reached 26,616.71 on Jan. 26, 2018. After hitting the Jan. 26 peak, the Dow went into free fall, dropping 4% the next week. On Feb. 8, it entered a market correction when it fell 1,032.89 points to 23,860.46. The one before that came on the final trading day of 2021, when Dow closed at 36,488.63 on Dec. 29, 2021, smashing the record it set on Nov. 8, 2021.
- Markets had a rough spring, as three consecutive reports showed the inflation rate picking up speed — from 3.1% in January to 3.5% in March.
- 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).
- After the Dow Jones Transportation Index, it is the second oldest U.S. stock market index still in use.
- Most of them are open to trade Monday through Friday during regular business hours in local time.
How do you invest in the Dow Jones Industrial Average?
The highest close occurred the day before when the index closed at 39,908.00 points. The peak was led in part by optimism that the Federal Reserve could cut interest rates later this year. 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. As such, point moves are a way to measure the relative change in the index’s value. That said, when comparing the value of the DJIA over time, many financial sites, as we have done above, use an inflation-adjustment calculator such as the U.S. Bureau of Labor’s CPI since this gives the relative change over time.
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That cemented the relationship between the Dow’s performance and the overall economy. Even today, for many investors, a strong-performing Dow equals a strong economy while a weak-performing Dow indicates a slowing economy. The DJIA is the second-oldest roboforex review U.S. market index after the Dow Jones Transportation Average. The DJIA was designed to serve as a proxy for the health of the broader U.S. economy. Often referred to simply as the Dow, it is one of the most-watched stock market indexes in the world.
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The Dow sees the end of a long bull market on Jan. 14, 2000, in part due to the strength of the Internet business and the subsequent bursting of the dot-com bubble. It then falls on March 7, 2000, rebounds to 11,124.83 on April 25, and falls again to 9,973.46 by March 14, 2001, beginning the 2001 recession. It then enters a period of volatility and drops to 8,920.70 after markets open following the September 11, 2001 terrorist attacks. The recession ends in November 2002 after a period of war-related uncertainty. The Dow Jones Industrial Average, also known as the Dow or DJIA, tracks 30 large, well-known companies that trade on the New York Stock Exchange and Nasdaq.
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Like most other stock market indices, the Dow undergoes periods of general increase and general declines or stagnation. A bull market is a term denoting a period of price increases, while a bear market denotes a period of declines. Wall Street generally considers a bear market in session when multiple broad market indices have a downturn of 20% or more in value lasting for at least 2 months. In recent years, investors have become accustomed to record highs for the Dow, but there have also been a few pronounced drops. That said, we’ve never seen a fall as dramatic as the stock market crash of 1929, after which the Dow lost nearly 90% of its value over the course of three years.
Understanding the Dow Jones Industrial Average (DJIA)
Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. Alternatively, investors could take a more conservative approach and buy shares of the SPDR Dow Jones Industrial Average ETF (DIA -0.81%). Building on that, Salesforce and Microsoft are leaning into the growing demand for artificial intelligence (AI). In fact, Morgan Stanley analyst Keith Weiss argues Microsoft in particular is the software company best positioned to monetize generative AI. But both could be long-term winners as more businesses seek productivity gains through automation.
Also referred to as the Dow 30, the index is considered to be a gauge of the broader U.S. economy. Broad market indexes only include securities with reasonable size and liquidity so that they can be purchased in an institutional size portfolio. Many micro-cap securities don’t trade with enough volume to be efficiently included in products such as index funds and exchange-traded funds (ETF).
That means if you had invested in a fund in 1983 that mirrored the Dow Jones industrial average, $1,000 would now be $32,000, or $10,500 in 1983 dollars. The Dow Jones Industrial average has doubled every 8.1 years, or 2,969 days, since 1983. Before that, it took more than 24 years for the index to double from 625 in the spring of 1959 to September 1983. Information provided by Titan Support is for informational and general educational purposes only and is not investment or financial advice.
After recovering from its Great Depression level, the Dow continued to be affected by several recessionary periods and crises leading up to the 2009 downturn. A November streak occurred after Donald Trump’s presidential win on Nov. 8. Traders were confident in a business-friendly Republican president. The index closed above 23,000 on Oct. 18, 2017; slightly more than a month later, it broke 24,000. The Dow had two streaks lasting more than 10 days, which had not occurred since 1959.
While the Dow includes a range of companies, all of them can be described as blue-chip companies with consistently stable earnings. 23The Dow first traded above 35,000 on Monday, https://www.broker-review.org/ May 10, 2021 before closing below it for the day. After two and a half months worth of several attempts, the Dow finally closed above 35,000 on Friday, July 23, 2021.
Investors tend to favor deceleration because it means prices are still moving up — but at a more sustainable rate. This also has implications for interest rates — the cost of borrowing money for everything from credit cards to auto loans and, indirectly, for mortgage rates. “40,000 is a great milestone, but end of the day there isn’t much difference between 39,999 and 40k,” Ryan Detrick, chief market strategist at Carson Group, said in a statement emailed Thursday. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.
Many records were set in 2019, thanks in part to trade talks with China that boosted firms in the index. The one big thing that both the Vanguard S&P 500 Growth ETF and the Invesco QQQ ETF have in common is that they are both more heavily weighted toward technology stocks than the S&P 500 index. And the fact is that technology is consistently changing the world, and technology companies as a result have become the biggest winners.
The Dow closed at 9,997.62 on Thursday, March 18, 1999.[18] It would take nearly two weeks to close above 10,000 on Monday, March 29, 1999. 10This was the Dow’s close at the peak of August 25, 1987 before the Black Monday stock market crash. Stock market gains since the 2008 financial crisis were mediocre in volume. Only three days traded more than 200 million shares, a level similar to the late 1990s. We’ve included a few key shocks to the stock markets along these timelines in addition to the presidents who were in office.
