The Dow Jones Industrial Average has made headlines by breaking above the 40,000 mark, a feat that seemed unimaginable just a year ago. This remarkable achievement has been driven by investor optimism surrounding the potential for artificial intelligence to boost corporate profits and the likelihood of the Federal Reserve cutting rates as inflation eases post-pandemic. The journey to this milestone has been filled with twists and turns, reflecting the volatility and resilience of the market.
Back in early 2017, the Dow first closed above the 20,000 mark amidst anticipation of lower corporate taxes in the U.S. under the administration of former President Donald Trump. This optimism propelled the Dow to surpass 25,000 by January 2018. However, the market faced challenges in 2018 as trade tensions with China escalated and the Federal Reserve began hiking interest rates. These factors led to a decline of over 5% by the year-end.
Despite the market's struggles, by early 2020, the Dow was on the cusp of reaching 30,000, hitting a high of 29,551.42. However, the outbreak of the Covid-19 pandemic sent shockwaves through the market, causing the Dow to plummet by 38% to a low of 18,213.65 in March 2020. In the months that followed, the Dow gradually recovered as efforts to combat the pandemic and support the economy gained traction.
By November 2020, the Dow had closed above 30,000 for the first time, marking a significant rebound from the pandemic-induced lows. The momentum continued into 2021, with the Dow surpassing 35,000. However, a bear market soon followed, pushing the Dow down to 28,660.51 before it rebounded once again. Despite these challenges, the Dow has managed to climb back, surging by 40% from its recent low.
The Dow Jones Industrial Average's journey to 40,000 is a testament to the market's resilience in the face of unprecedented challenges. While the road has been marked by volatility and uncertainty, investors remain hopeful for continued growth and stability in the future.