Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation. The Dow tracks 30 large, publicly owned blue-chip companies trading on the New York Stock Exchange and the Nasdaq. The selection is not based on strict quantitative criteria but rather on the decisions of the editors of The Wall Street Journal.
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.
- Various Registered Investment Company products (“Third Party Funds”) offered by third party fund families and investment companies are made available on the platform.
- On Oct. 13, 2008, the Dow gains 936 points after governments and central banks pour money into the markets to jumpstart the global economy.
- President John F. Kennedy demanded the removal of the weapons and launched a 13-day naval quarantine to prevent ships from reaching Cuba, which may have held weapons from the Soviets.
- This high occurred only 42 trading sessions after closing above 19,000.
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.
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Any historical returns, expected returns, or probability projections are hypothetical in nature and may not reflect actual future performance. Account holdings and other information provided are for illustrative purposes only and are not to be considered investment recommendations. The content on this website is for informational purposes only and does not constitute a comprehensive description of Titan’s investment advisory services. At recent prices, the SPDR Dow Jones Industrial Average ETF returned 473% over the last two decades, or 9.1% annually. Additionally, it was slightly less volatile than the broader S&P 500, as evidenced by its 10-year beta of 0.95.
It reaches its lowest point of 6,594.44 on March 5, 2009 during a bear market. The 2008 stock market crash was more dramatic than any other downturn in U.S. history. It took almost four years for the market to bottom out at that time. 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.
In the midst of a recession, the Dow has two milestone days of gains. On Oct. 13, 2008, the Dow gains 936 points after governments and central banks pour money into the markets to jumpstart the global economy. Two weeks later, on Oct. 28, the Dow rises 889 points, fueled by optimism that the Federal Reserve would cut the interest rate. The Dow Jones stock market index (also known as the Dow https://www.dowjonesrisk.com/ or DIJA) tracks 30 large, blue-chip companies on the New York Stock Exchange and Nasdaq. After the Dow Jones Transportation Index, it is the second oldest U.S. stock market index still in use. 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).
The index fund bears a below-average expense ratio of 0.16%, meaning the annual fee on a $10,000 portfolio would be $16. 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. Given its large-cap focus, the roster of companies included in the Dow fails to include companies of other sizes. 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.
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The average closed at 2,999.75 on Monday, July 16, 1990, and closed unchanged the following day;[17] however, it would take until April 17 of the next year for the Dow to finally close above 3,000. The easiest way to invest in the Dow may be to buy shares in State Street Global Advisors’ SPDR Dow Jones Industrial Average ETF Trust, which trades under the ticker symbol DIA. 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. The Dow was volatile in 2015 because it was based on just a few companies. Record-low interest rates allowed firms such as Apple and IBM to borrow billions to buy back shares.
A secular bull market is a period in which the stock market index is continually reaching all-time highs with only brief periods of correction, as during the 1990s, and can last upwards of 15 years. A cyclical bull market is a period in which the stock market index is reaching 52-week or multi-year highs and may briefly peak at all-time highs before a rapid decline, as in the early 1970s. It usually occurs within relatively longer bear markets and lasts about three years. The Dow set two milestones in 2014 and set 39 closing records. Share repurchases among the S&P 500 companies were 59% higher in the first quarter of 2014 than the first quarter in 2013.
Record Highs Set in 2021
For starters, the Dow Jones we know is not a person — but you already knew that. Named for its two founders, the Dow Jones is a stock market index, just like the S&P 500 or the Nasdaq. The Dow posted its all-time high during intraday trading on Feb. 23, 2024, reaching a peak of 39,282.28 points. 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. Of the 26 records set that year, 17 occurred after the presidential election.
The 2000s Cyclical Bull Market (2006–
The Federal Reserve began buying banks’ mortgages as they recognized that banks did not have adequate liquidity. 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. 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.
Information provided by Titan Support is for informational and general educational purposes only and is not investment or financial advice. Stay informed on the most impactful business and financial news with analysis from our team. 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 -0.56%).
It was the largest amount since 2007, right before the stock market crashed. The Sept. 29, 2008 stock market crash is among the most dramatic economic events of U.S. history to date. Although the market’s 50% drop is less than the Great Depression’s 90% drop, it takes only 17 months to reach that low, compared to a period of four years in the 1930s. The Dow falls 13% in October 2008 and hits a new low for the year of 7,552.29 in November 2008.