Reaching New Heights with Dow Jones 40,000-Milestone

Reaching New Heights with Dow Jones 40,000-Milestone

Dow Jones’ claim to reach 40,000 was bolstered by resiliency shown in the US economy, favourable macro indicators, and rate-cut speculation.

This jump was made possible by improving investor sentiment following the epidemic, higher corporate earnings, lower inflation, and increasing expectations of interest rate cuts.

The US Dow Jones Industrial Average surpassed 40,000 on May 16, 2024, about 3.5 years after reaching 30,000. This rise was fueled by improved investor sentiment following the epidemic, greater corporate earnings, lower inflation, and increased anticipation about interest rate reduction.

Data show that the time it takes for the Dow to acquire 10,000 points is reducing. The rise from 1,000 to 10,000 took over 18 years, but the climb from 10,000 to 20,000 took only 13 years. The transition from 20,000 to 30,000 took around four years, but the subsequent increase to 40,000 took only 3.5 years.

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Source – Bloomberg

Dow Jones’ claim to 40,000 was bolstered by the US economy’s resiliency, favourable macro indicators, and speculation about rate cuts. For example, consumer prices fell to 3.4% in April, the first drop in 2024, causing traders to bet on a 70% chance of a rate decrease in September, according to the CME FedWatch tool.

Furthermore, new jobless claims fell by 10,000 to a seasonally adjusted 2,22,000 in the week ended May 11, improving market optimism.

Dow Jones move up to 40,000 from 10,000: a brief overview

In the past, on the 29th of March 1999, during the “unreasonable exuberance” of the tech boom, the Dow Jones hit the 10,000 mark. Luckily, the Dow fell by about 30% by September 2001 once the dot-com bubble burst a year later.

Additionally to that tragedy, the 2008–2009 financial crisis had a negative impact on the index, causing it to drop below the 10,000 mark. The index did, however, reach 15,000 on May 7, 2013, as the economy started to emerge from the depths of the recession.

On January 25, 2017, the Dow Jones hit the 20,000 mark as shareholders looked to the Trump administration for lower taxes and fewer restrictions.

 Later, the index climbed to the 25,000 mark on January 4, 2018, helped by the passage of Trump tax cuts, particularly the lowering of the corporate tax rate in December 2017.

However, the index fell to 18,000 in March 2020 after the Covid-19 pandemic struck.

The index rose in the months that followed as COVID-19 vaccine development accelerated and the Federal Reserve and its executives took dovish efforts to maintain the economy’s liquidity. On the 24th of November in 2020, the index known as the Dow Jones had reached 30,000 for the initial period maintaining the stock market hot once more.

Dow Jones has come a long way to where it is today. Its trip to 50,000 remains to be seen, as market participants anticipate interest rate decreases, elections, and improved market conditions.

Disclaimer: The views and investment tips expressed by investment experts on wallstreetsights.com are their own and not those of the website or its management. wallstreetsights.com advises users to check with certified experts before making any investment decisions.

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