For much of the U.S. stock market's history, the highs, lows, bull market runs, and shocking crashes have been captured best for the public and many investors by the Dow Jones Industrial Average.
This stock market index, also known as the Dow or DIJA, tracks 30 large blue-chip companies on the NYSE and Nasdaq. Although the Dow isn't as big as the S&P 500 or the Nasdaq, neither of them has been as influential or popular enough to be the subject of a Broadway musical.
The Dow is the second-oldest U.S. market index still in use, after the Dow Jones Transportation Index. It was formed in 1896 with 12 mostly industrial stocks and has been fixed at 30 since 1928. The index evolves over time and its stocks are sometimes removed and replaced. Unlike the S&P 500 and the Nasdaq, the Dow weights stocks by price rather than by market capitalization derived by multiplying share prices by the number of shares outstanding.
What is the highest the DOW has ever been?
As of March 2022, the Dow Jones’s all-time high at market close was 36,799.65, on Jan. 4, 2022. It reached a higher level the next day, at 36,952.65, but closed below its all-time high.
Since 2009, when the longest bull market in U.S. stock market history began. The Dow has consistently hit new highs since then. That bull run intensified during the two year period from 2019 to its all-time high in January 2022. World events that contributed to this run include:
- Trade talks between the U.S. and China, which led to 22 record closes in 2019;
- President Donald Trump’s transition out of office in late 2020, which led to the Dow breaking the 30,000 mark;
- Promising news that the COVID-19 pandemic would not require further lockdowns, which led to consistent high closes in 2021.
What is the largest single-day point gain?
The Dow gained 2,117.72 points—the biggest single-day point gain in history—on March 24 after Trump announced the country could be up and running by Easter.
Nearly all the Dow’s historic point gains and losses occurred in 2020 on news of stimulus packages and vaccines, but also on disappointments regarding the pandemic’s effect on the global economy.
What are the highest records set since 2020?
Since 2020, the Dow has reach multiple milestone highs:
2020. The Dow set a record high of 28,868.80 on Jan. 2 and another record a week later. It reached a milestone of 29,000 on Jan. 15. After experiencing three of the biggest drops in history during the spring, it broke 30,000 on Nov. 24, and ended the year at a record high of 30,606.48.
2021. The Dow crossed the 31,000 mark on Jan. 7, reaching an all-time high on Jan. 20 of 31.188.38. COVID pandemic recovery news, including strong retail sales and lower unemployment benefit claims, spurred the Dow on. On March 10, the Dow closed above 32,000 for the first time, and then closed above 33,000 on March 17. On April 15, it reached a new high, closing at 34,035.99. It rose further during the year, reaching 35,625.40 on Aug. 16, closing at a new record high.
2022. The year started with a bang as the Dow closed at 36,799.65 on Jan. 4, its all-time high to date. However, the stock market indexes, including the Dow, declined after that amid tighter monetary policy from the Federal Reserve, the invasion of Ukraine by Russia, rising energy prices and lingering investor concerns about new variants of the coronavirus.
What is the lowest the Dow has ever been?
Investors in recent years have become accustomed to record highs for the Dow, but there have been some pronounced drops as well. Still, there has never been as dramatic a fall as the Great Depression, in which the Dow lost nearly 90% of its value over just three years. It reached its all-time low of 41.22 in 1932.
Largest drop in one year period
The subprime mortgage and credit crisis in 2007-2008 that began the Great Recession was the period of most volatility in recent history, which led to the biggest drop in the Dow’s value in a one-year period. On Oct. 9, 2007, the Dow hit a pre-recession high, closing at 14,164.53, despite growing concerns about the subprime mortgage crisis. Banks had offered easy home loans to virtually everyone, even those with bad credit. Falling home prices throughout 2007 prompted defaults on subprime mortgages. The Federal Reserve began buying banks’ mortgages, recognizing that banks didn’t have enough liquidity.
Heading into 2008, job losses were mounting, economic growth had slowed, and in March the Fed had to prop up the struggling investment bank Bear Stearns, which would have failed. By the middle of the year, the U.S. Treasury Department had to bail out the government-sponsored Fannie Mae and Freddie Mac agencies, guaranteeing $25 billion of their mortgage loans and $300 billion in new loans. Investment bank Lehman Brothers declared bankruptcy on Sept. 15, 2008, and the Dow dropped more than 200 points. A day later, the Fed announced a bailout of the insurance company American International Group, which had run out of cash paying off credit default swaps it had issued against the failed mortgage-backed securities. On Sept. 1, the Dow fell 449.36 points.
The stock market crash of 2008 happened on Sept. 29, 2008, and the Dow fell by 777.68 points in intraday trading, when Congress couldn’t agree on passing a bill to spend $700 billion to prop up the U.S. financial system (it passed a few days later). The Dow ended 2008 at 8,779.39, down almost 34% for the year. By March 5, 2009, the market had fallen by more than half from its previous high point and the Dow closed at 6,594.44.
It took about five years for stocks to recover. The Dow returned to its October 2007 highs in March 2013.
Largest single-day percentage drop
The Dow’s largest percentage drop in history happened when the market crashed on October 19, 1987—on what is now known as Black Monday—and the Dow lost 22.6% in a single day.
Largest single-day point drop
The largest single-day drop for the Dow occurred on March 16, 2020. It dropped 2,997 points after President Trump announced that coronavirus shutdowns could extend until August of that year. The Dow had already dropped by 2,013.76 points on March 3, and 2,352.60 points on March 12 on fears of an oil price war between Russia and Saudi Arabia and continued coronavirus fears.
A brief history of the Dow Jones from 1929–2013
1929 Great Depression. The Dow falls by 90% in less than four years during The Great Depression, reaching its low of 41.22 on July 8, 1932. It would take until 1954—25 years—to retain its September 1929 high.
1945 recession. The Dow rises 19.2% during a recession due to strong business spending, even after wartime government spending drops.
1948-49 recession. The U.S. economy begins to adjust to peacetime production levels, and the Dow drops 16% from 193.16 on June 15, 1948 to 161.60 on June 13, 1949.
1953 recession. The Dow falls 10.1% on Jan. 2 to 262.54 on Sept. 1, then reaches a new high of 382.74 on Nov. 23, 1954. Military demobilization after the Korean War causes a 10-month recession, after which the Dow finally beats its pre-Depression high.
1960 recession. The economic downturn of the recession prompts a fall in the Dow of 13.9% from Dec. 31, 1959, to 585.24 by Nov. 1, 1960. In February 1961, President John F. Kennedy uses stimulus spending to end the recession.
1962 Cuban Missile Crisis. The U.S. enacts a trade embargo against Cuba on Feb. 7, 1962, and the Dow drops 26.5% to 536.76 in June. The crisis ends on Oct. 28, 1962.
1970 recession. Between Dec. 3, 1968, and May 26, 1970, the Dow drops 30% to a low of 651.16.
1973-75 recession. The Dow declined by 45% from 1,051.70 on Jan. 11, 1973, to 598.64 on Dec. 4, 1974, in part because of the end of the gold standard by President Richard M. Nixon.
1980–82 recession. After a 16% drop from a 903.84 high on Feb. 13, 1980, to 759.13 on April 21, 1980, the Fed lowers the federal funds rate (the interest rate for banks to loan money overnight to each other) to 8.5%. The Dow rises to 1,024.05 on April 27, 1981. The Fed then raises rates to combat inflation, which reduces business spending. The Dow drops 22.4% to 776.92 by Aug. 12, 1982.
1987 stock market crash. The Dow experiences its largest single-day percentage drop of 22.6% on Oct. 19,1987. The so-called Black Monday crash is caused in part by computer trading that forces sell orders when the market turns down.
1990-91 recession. Iraq invades Kuwait on Aug. 2, 1990, and the Dow falls 17% in three months.
1998 currency crisis. Thailand ends its peg of the baht to the U.S. dollar and currency values fall in Southeast Asia. The Dow falls 554.26 points on Oct. 27 1997, its biggest point loss at that time, and the U.S. stock market suspends trading. On Aug. 17, 1998, Russia devalues the ruble and defaults on its bonds. The Dow starts to fall the next day from 8,714.64 to 7,539.06 by Aug. 31, down by 13%.
2001 recession. The Dow ends a long bull market on Jan. 14, 2000, in part due to the strength of the Internet business and the subsequent bursting of the dot-com bubble. But it then falls on March 7, 2000, rebounds to 11,124.83 on April 25, and falls again to 9,973.46 by March 14, 2001, beginning the 2001 recession. It then enters a period of volatility and drops to 8,920.70 after markets open following the September 11, 2001 terrorist attacks. The recession ends in November 2002 after a period of uncertainty about war.
2008-09 recession. The Sept. 29, 2008, stock market crash is among the most dramatic in U.S. history to date, falling 777.68 points in intraday trading. Although the market drop, at 50%, is less than the 90% drop during the Great Depression, it takes only 17 months to reach bottom, compared with 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. It reaches its lowest point in the bear market on March 5, 2009, of 6,594.44.
2008. In the midst of a recession, the Dow has two milestone days of gains. On Oct. 13, 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 on optimism that the Fed would cut the interest rate.
2013 recovery. The Dow finally recovers its losses from the Great Recession on March 15, when it closes at 14,253.77. It had taken five years to surpass its previous record of 14,164.53, from October 9, 2007. During 2013, the Dow reaches several milestones: it gains 26.5% for the year, higher than any year on record, and rises above 15,000 for the first time in May, and then above 16,000 in November.
The bottom line
Historically, markets tend to rise as the economy expands, and the Dow is no exception. Although the Dow reflects periods of volatility, its annualized average returns for the 10 years ended June 30, 2019, shows an increase of 15.03%; its 20-year return—which includes the market peak of 2000, the bursting of the dot-com bubble, and the market losses of 2008—also ended June 30, 2019 was 7.03%.
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