The Dow Jones Industrial Average is one of the many gauges of stock market performance. This history of the Dow since the Great Depression demonstrates how stock market fluctuations reflect the natural stages of the business cycle. This was the Dow’s third consecutive trading day with a record close and the fourth record closing in just two months. The previous high was recorded just a day prior, when the index ended the trading day at 36,585.06.
The Dow’s activity broke new records in terms of downward movement in 2009. 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. With just a 0.16% expense ratio, the Dow ETF Trust provides a simple way of investing in the Dow.
It beat its January high, rising to 9,093.24 by the close of the day. The Senate reintroduced the bailout as the Troubled Asset Relief Program on Oct. 3. The Dow gained 3,472.56 points during 2013, higher than any prior year on record.
Additionally, it was slightly less volatile than the broader S&P 500, as evidenced by its 10-year beta of 0.95. The index fund bears a below-average expense ratio of 0.16%, meaning the annual fee on a $10,000 portfolio would be $16. 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. On Monday, Sept. 15, 2008, Lehman Brothers Holding, Inc. (an investment bank) declared bankruptcy.
What Is the Dow Jones Industrial Average (DJIA) All-Time High?
If you do want some growth and are willing to take on more risk, you may want to avoid stocks like Verizon Communications and Walgreens Boots Alliance. Instead of buying a Dow ETF, you can pick your 10 favorite Dow stocks and buy a share of each to create your own mini Dow portfolio. 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.
Investors looking to capitalize on that should consider buying some of the more promising blue chip stocks in the Dow Jones. For instance, Salesforce and Microsoft have strong market positions and solid growth prospects that could unlock plenty of value for patient shareholders. The Dow was volatile in 2015 because it was based on just a few companies.
- 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.
- Most 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.
- 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).
- Or e-commerce, streaming, cybersecurity, cloud and software infrastructure, semiconductor innovations, mobile banking, electric vehicles, the energy transition, and more.
- 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.
And it also shows that, despite a strong year-to-date return for the Dow, the index is still a fairly good price. The Invesco QQQ Trust’s expensive multiple shows that investors are banking on future earnings, not present earnings. And because of that, Nasdaq stock prices have grown at a faster rate than earnings. One of the largest Dow exchange-traded funds (ETFs), the SPDR Dow Jones Industrial Average Trust (DIA -0.55%), has an average component price-to-earnings ratio of 22.1.
Dow Jones Highest Closing Records
In general, the Dow has underperformed during strong years in the stock market because the Dow has a higher focus on value and income, whereas the Nasdaq Composite focuses less on value and income. If the market is doing well, that probably means investors are willing to take on more risk, pay a higher price for growth, and gravitate toward Nasdaq stocks. The Dow posted its all-time high during intraday trading on Feb. 23, 2024, reaching a peak of 39,282.28 points.
The most recent record closing occurred on Jan. 4, when the index closed at 36,799.65, blowing past the all-time high closing of 36,585.06 it had just a day before. 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 stark contrast in valuation shows that premium investors are willing to pay for growth right now.
The market fell more than 50% in just a year and a half because of subprime mortgage and credit crisis that kicked off the Great Recession. It hit an all-time high of 34,200.67 points on April 16, 2021. In the autumn, it began to consistently close above 35,000 points, and by the last week in December 2021, it surpassed 36,000 points. The following are some milestones achieved by the Dow Jones Industrial Average. In parentheses, when helpful, we provide the Dow’s points as inflation-adjusted to Feb. 23, 2024, for a relative comparing to its record high. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services.
The best way to invest in the Dow in 2024
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). But this robust start was not indicative of extreme volatility the index would face as the year progressed. First, the conflict between Russia and Ukraine saw gas prices spike sharply. At the same time, the strength in the U.S. labor market meant extremely competitive wages driving consumer demand. Both of those factors sent inflation in the U.S. soaring to record levels not seen in over 40 years.
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. It hit two of them in the first few weeks in January, closing above 25,000 on Jan. 4. The index breached 26,000 on Jan. 17, then continued on to set 15 closing records in the rest of 2018. All these events created a lot of uncertainty for investors and the Dow bore the brunt of it, falling into a bear market in September 2022. Despite all time highs early in the year, six of the 20 worst-one day point losses for the Dow occurred in 2022.
1991 Recession
But both could be long-term winners as more businesses seek productivity gains through automation. The downturn reflected a 10-month recession, from July 1953 to May 1954, during the military demobilization following the Korean War. The Dow fell 17% in three months, from 2,864.60 on Aug. 2 to 2,365.10 https://www.dowjonesrisk.com/ on Oct. 11, 1990. On Aug. 17, 1998, Russia devalued the ruble and defaulted on its bonds. By Aug. 31, the Dow had fallen 13%, from 8,714.64 on Aug. 18 to 7,539.06 on Aug. 31. The Long-Term Capital Management hedge fund almost collapsed, threatening to push its banking investors into bankruptcy.
The highest close occurred the same day when the index closed at 39,131.53 points. The peak was led in part by a relaxation of concerns that the Federal Reserve would keep interest rates high because of inflation, thus dampening economic activity. 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.
