The Dow Jones Industrial Average has made history by surpassing the 40,000-point mark, a feat that was unforeseeable just a year ago. This new high has been attributed to a number of factors, including the promise of artificial intelligence enhancing corporate profits and the Federal Reserve potentially lowering interest rates as inflation decreases from its peak during the pandemic. It has been a turbulent journey for the Dow to reach this milestone.
The Dow’s journey to 40,000 has been marked by significant ups and downs. It first closed above 20,000 back in early 2017, driven by investor optimism surrounding potential corporate tax reductions in the United States under former President Donald Trump. By the end of that year, those expectations had been met, propelling the Dow past 25,000 in January 2018. However, 2018 brought challenges as trade tensions between the U.S. and China escalated, and the Federal Reserve raised interest rates. This led to the Dow finishing the year with a more than 5% loss.
In 2019, the stock market began to recover as the Federal Reserve shifted away from raising interest rates. By early 2020, the Dow was on the brink of hitting 30,000, reaching a peak of 29,551.42 on February 12, 2020. The onset of the Covid-19 pandemic caused the Dow to plummet by 38% from its peak in February to a low of 18,213.65 in March 2020. However, a combination of progress in Covid vaccine development and unprecedented economic support measures from the Fed and lawmakers helped the benchmark regain its footing. By November 2020, the Dow had closed above 30,000 for the first time, setting the stage for further gains.
The momentum from the lows of the pandemic continued into 2021, with the Dow surpassing 35,000. Yet, the market faced challenges as a bear market pushed the Dow down to 28,660.51 before it managed to rebound. Since hitting this recent low, the Dow has soared by an impressive 40%.
By analyzing the Dow’s trajectory over the past 20,000 points, it becomes evident that the journey to 40,000 has been characterized by resilience, volatility, and optimism. The milestone represents a culmination of both the challenges and triumphs that have shaped the Dow’s path to success.
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