The Dow Jones Just Hit an All-Time High Here’s Why It Could Beat the Nasdaq in 2024. The Motley Fool

The year started with a bang as the Dow closed at 36,799.65 on Jan. 4, its all-time high to date. For much of the U.S. stock market’s history, the highs, lows, bull market runs, and shocking crashes have been captured best for the public and many investors by the Dow Jones Industrial Average. Stock market gains since the 2008 financial crisis were mediocre in volume.

Most stock market indexes are weighted by market capitalization — equal to share price times the number of shares outstanding — but the Dow Jones Industrial Average is price-weighted. The value of the Dow Jones Industrial Average is calculated by determining the average value of the stock prices of the 30 listed companies. However, calculating that average value is not as simple as totaling the 30 stock prices and dividing by 30.

  1. Over time, as the focus of the index shifted from measuring the performance of the heavy industrial sector to gauging the health of the entire U.S. stock market, the number of stocks in the index expanded.
  2. A number of records were set in 2019, thanks in part to trade talks with China.
  3. It was the largest amount since 2007, right before the stock market crashed.
  4. Over time, the index became a bellwether of the U.S. economy, reflecting economic changes.
  5. Salesforce has been the leader in customer relationship management (CRM) software for 10 consecutive years, and the CRM market is forecast to grow by 14% annually through 2030.
  6. Journalist Charles Dow created the index in 1896 to serve as a proxy for the overall U.S. economy.

While it wasn’t as dramatic as the Great Depression, the drop happened much more quickly. 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. The Dow was volatile in 2015 because it was based on just a few companies.

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10This was the Dow’s close at the peak of August 25, 1987 before the Black Monday stock market crash. This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. References to any securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services.

Record-low interest rates allowed firms such as Apple and IBM to borrow billions to buy back shares. These actions artificially raised their earnings per share and the prices of their remaining outstanding stocks (stocks which are still held by shareholders). That correction was more than 16% lower than its all-time high set in May of the same year, putting the index into a correction but not a bear market. Investors worried that China’s yuan devaluation and the uncertainty over the Fed’s rate increase would push the index further downward. The Dow suffered a market correction between August 2015 and April 19, 2016, leading to a 2016 downturn.

This means that stocks in the index with higher share prices have greater influence, regardless if they are smaller companies overall in terms of market value. This also means that stock splits can have an impact on the index, whereas they would not for a market cap-weighted index. A bull market, or a bull run, is an extended period of rising stock prices.

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The Dow gained 3,472.56 points during 2013, higher than any prior year on record. Cardillo also said he expects the year-end rally in stocks to continue through 2024, but perhaps not to be as “vivacious” as on Wednesday. Still, Rooney Vera said concerns remain about whether the rally is sustainable in the next 12 to 18 months, as risks of a recession aren’t eliminated. The U.S. central bank on Wednesday kept its key policy rate unchanged at the range of 5.25% to 5.5%, a 22-year high, while officials penciled in three rate cuts in 2024, according to its revised dot-plot forecast.

Investors in funds that track the Dow gain exposure to all the stocks listed on the index. The longest bull market in history lasted approximately 11 years, starting in March 2009 and ending in Feb. 2020. 21After peaking on February 12, 2020, the Dow Jones rapidly fell into correction later that same month and into bear market territory in the next month amid the COVID-19 pandemic.

The Dow Jones Just Hit an All-Time High. Here’s Why It Could Beat the Nasdaq in 2024.

While the Dow includes a range of companies, all of them can be described as blue-chip companies with consistently stable earnings. A lot of Dow stocks have inexpensive valuations relative to the market. Slow-growing Dow companies like Procter & Gamble, McDonald’s, and Walmart aren’t going to wow you with their growth. But they will hold up extremely well during an economic downturn while supporting reliable dividend growth. If you think about the industries that have contributed to economic growth over the last decade, a lot of them are tech-related. Just think about how much phones have evolved and all the industries and companies that have benefited.

However, returns have varied dramatically between past bull markets, so investors would do better to benchmark against a different metric. Specifically, the Dow Jones returned about 9% annually over the past four decades, and its performance will likely be similar over the next four decades. The Dow Jones Industrial Average (DJIA) is a stock market index that tracks 30 large, publicly-owned blue-chip companies trading on the New York Stock Exchange (NYSE) and Nasdaq. The Dow Jones is named after Charles Dow, who created the index in 1896 along with his business partner, Edward Jones. Also referred to as the Dow 30, the index is considered to be a gauge of the broader U.S. economy. One of the largest Dow exchange-traded funds (ETFs), the SPDR Dow Jones Industrial Average Trust (DIA 0.19%), has an average component price-to-earnings ratio of 22.1.

The Dow witnessed a sharp decline in the end of November over fears of inflation and the COVID-19 pandemic, before resuming its quest to break more all-time high milestones. The Dow Jones Industrial Average is a stock index of 30 U.S. blue-chip large-cap companies, python multiprocessing vs threading which has become synonymous with the American stock market as a whole. The index, however, only has 30 companies, and the index itself is price-weighted, meaning that it does not always present an accurate reflection of the broader stock market.

The Dow Jones Industrial Average (the Dow) is an index of the 30 top-performing U.S. companies. The most recent all-time-high record (as of this writing) was on Jan. 4, 2022, when it closed at 36,799.65. 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.

13The Dow first traded above 10,000 on Tuesday, March 16, 1999, but dropped back before closing that day. 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. This article is a summary of the closing milestones of the Dow Jones Industrial Average, a United States stock market index. Since first closing at 62.76 on February 16, 1885,[1] the Dow Jones Industrial Average has increased, despite several periods of decline.

The index closed above 18,000 on Dec. 23, and then closed its high for the year at 18,053.71 on Dec. 26. The chart below shows four of those closing records, as they increase by the thousand. On July 3, the Dow hit a new high when the Trump administration announced it would resume trade negotiations with China, averting additional tariffs (taxes on imports).

The Dow set a record high of 28,868.80 on Jan. 2 and another record a week later. After experiencing three of the biggest drops in history during the spring, it broke 30,000 on Nov. 24, and ended the year at a record high of 30,606.48. This stock market index, also known as the Dow or DIJA, tracks 30 large blue-chip companies on the NYSE and Nasdaq. Although the Dow isn’t as big as the S&P 500 or the Nasdaq, neither of them has been as influential or popular enough to be the subject of a Broadway musical.