Many 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. Confidence that a recession could be averted continued into 2024. The Dow climbed above 38,000 in January 2024 and reached 40,000 by May. The index peaked again in July, almost reaching 42,000, then rallied in September when the Fed started cutting interest rates for the first time since 2020.
Top 10 Highest Dow Jones Closing Values in History
It hit an all-time high of 34,200.67 points on Apr. 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. Journalist Charles Dow and his business partner, Edward Jones, established the Dow Jones Industrial Average in 1896 with 12 companies in the industrial sector. The number of companies included in the index increased to 20 in 1916 and then to the current number, 30, in 1928. Since then, the Dow has remained among the most frequently discussed and commonly tracked equities indexes.
The Dow Jones Industrial average has doubled every 8.1 years, or 2,969 days, since 1983. Before that, it took more than 24 years for the index to double from 625 in the spring of 1959 to September 1983. These big, round numbers don’t mean much, but they do serve as a reminder that over time stock investments can pay off. The S&P 500 has returned about 10.6% annually for the past 100 years, according to analysis from Trade That Swing. BrightFunded operates on a 2-step evaluation model to identify skilled traders.
Dow 5000 to 10,000: 1,224 days
We would add that you also shouldn’t follow the performance of an index that you don’t comprehend. Yet, few investors have a strong understanding of what the Dow Jones Industrial Average (DJIA) actually is (like that it is the same thing as “the Dow”) or how it began. While the 40,000 milestone is attention-grabbing, the number itself means little to investors. That means if you had invested in a fund in 1983 that mirrored the Dow Jones industrial average, $1,000 would now be $32,000, or $10,500 in 1983 dollars.
What Do the Points in the Dow Jones Industrial Average Mean?
- 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 DJIA remains one of the most closely watched indicators of economic health.
- 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.
- The value of the index was originally calculated as the total of the stocks divided by 12 – an average of the stock prices of those companies on the list.
- After hitting the Jan. 26 peak, the Dow went into free fall, dropping 4% the next week.
With inflation cooling and the Fed signaling possible rate cuts, analysts expect more record-setting moves through late 2025. Intraday highs show the peak value during the trading session, but the “record close” at 45,631.74 on August 22 is the official all-time high most investors track. For active traders, record-breaking markets are full of opportunity. At MasterFunders, you can trade with firm capital instead of your own, scale accounts up to $1M+, and get payouts in as little as 7 days. The DJIA launched in 1896 with just 12 companies, primarily in the industrial sector. They included railroads, cotton, gas, sugar, tobacco, and oil.
The records set in the fall were the first ones since the Dow reached 26,616.71 on Jan. 26, 2018. After hitting the Jan. 26 peak, the Dow went into free fall, dropping 4% the next week. On Feb. 8, it entered a market correction when it fell 1,032.89 points to 23,860.46. By Jan. 20, it closed at 15,766.74, as investors panicked over plummeting oil prices, the devaluation of the yuan, and turmoil in China’s stock market. The Dow hit one milestone and had 26 closing records in 2016. Of the 26 records set that year, 17 occurred after the presidential election.
- While it wasn’t as dramatic as the Great Depression, the drop happened much more quickly.
- The DJIA launched in 1896 with just 12 companies, primarily in the industrial sector.
- Intraday highs show the peak value during the trading session, but the “record close” at 45,631.74 on August 22 is the official all-time high most investors track.
- Unlike the S&P 500, the Dow isn’t a weighted average and doesn’t represent market cap.
- Admittedly the steady hands of the Federal Reserve chairs during those eras likely had greater sway over the success of the markets than whoever was in the White House.
How Are Companies in the Dow Jones Industrial Average Selected?
The index’s 2016 closing high was 19,974.62, set on Dec. 20, 2016. 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. The one before that came on the final trading day of 2021, when Dow closed at 36,488.63 on Dec. 29, 2021, smashing the record it set on Nov. 8, 2021. 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. These funds track the DJIA through a similar composition and weighting of stocks.
📊 Table: DJIA vs. S&P 500 vs. Nasdaq – 2025 YTD Returns (as of Aug
A company with comparatively few shares and a large share price counts more than a company with a high number of shares and a lower stock price. Dow created the index so that it was weighted by price. The value of the index was originally calculated as the total of the stocks divided by 12 – an average of the stock prices of those companies on the list.
When Trump began the transition process late in November, 2020, stocks roared back. Critics say the Dow doesn’t fully represent the U.S. economy because it includes only 30 large-cap companies, ignoring smaller ones. They believe the S&P 500, with more companies, offers a better reflection of the economy. When major corporations start to lose money across the board, being more conservative as an investor is not a bad strategy. The Dow Jones Industrial Average is a rough overview of the economy – very rough. While only thirty stocks are included, together they paint a picture about the health of the economy in the United States.
A Brief History of the Dow
Different indices reflect different trading styles, short-term Nasdaq rallies mirror day trading vs swing trading strategies in practice. From the Great Depression to COVID-19, but it has always bounced back to set new records. The August 2025 record is just the latest proof of that resilience.
That cemented the relationship between the Dow’s performance and the overall economy. Even today, for many investors, a strong-performing Dow equals a strong economy, while a weak-performing Dow generally means a slowing economy. The actual sizes of the companies on the list never figures in either – just the share price.
It began on Jan. 4, when the Dow closed 160 points lower as investors worried about a slowdown in China’s economic growth. But this robust start Famous investors 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. The Dow Jones Industrial Average is one of the many gauges of stock market performance.
As an investor, the Dow Jones Industrial Average matters. Not because it is terribly accurate or insightful, but because other people consult it. The same way that a stock is only worth what someone is willing to pay for it, the value of the Dow matters because other people may use it in their calculations of value. When anyone reports the value of the Dow, they just state the price, but that is not fair.
The new highs reflected optimism that the Federal Reserve would continue to cut interest rates and that the incoming administration would promote business growth. 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.