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Dow Jones Industrial Average

Dow Jones Industrial Average (DJIA) is one of the most important indicators of the US market. Find out when it was at its best.

Marcel Deer - Writer for Fortrade
By Marcel Deer
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Edited by Dragan Stevanovic

Updated June 5, 2024.

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Most investors and stock traders will have heard of the Dow Jones Industrial Average. The DJIA is more than an investment instrument, it's also a solid predictor of where other stocks are going. The DJIA's all-time highs tend to be important since they could signal the beginning of a bearish or bullish market.

Note: Fortrade offers the ability to trade the price changes of instruments with CFDs and NOT to buy/sell ownership of instruments themselves. All the information in this blog is purely educational and should not be considered advice.

Why Is the Dow Jones Industrial Average Important?

The Dow Jones Industrial Average (DJIA) is a powerful barometer of the US stock market's health and overall economic strength.

The DJIA is made up of 30 large-cap blue-chip stocks. The average is calculated by totaling the stock prices of each company and dividing the sum total by the Dow Divisor.

DJIA is a price-weighted index which means that higher-priced stocks artificially impact the average more than the lower-priced ones.

» New to indices? Start with the basics of ETFs

Historical Overview of DJIA Milestones

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The Dow Jones was created in 1896 by Charles Dow and Edward Jones and included 12 industrial stocks.

The first all-time high (ATH) was recorded in 1906 when the DJIA beat its previous peak. Other well-known ATHs happened in:

  • October 1929, before the Wall Street Crash
  • September 1955 following post-war economic growth in the USA
  • November 1966, fueled by the "Go-Go" years of the stock market

Many all-time highs have been reached since the 2000's including the following:

October 2007: 14,198.10 points

In October 2007, the DJIA reached a new peak thanks to a steep rise in corporate earnings, low global interest rates, and strong economic growth. Shortly after this peak, the global financial crisis happened, leading to a massive market downturn.

» Discover how to day-trade in a volatile market

October 2013: 15,676.94 points

Five years after the 2008 crash, the DJIA achieved another ATH.

This time, it was fueled by liberal monetary policies designed to stimulate economic growth and slowly improve consumer confidence. The new high was reached after a period of slow, steady growth.

January 2018: 26,616.71 points

With optimism booming after corporate tax cuts, strong corporate earnings, and deregulation, the tech sector drove growth.

Apple, Microsoft, and Intel were critical players in the exchange. Improvements in AI companies, mobile tech, and cloud computing solutions contributed massively to this high.

» New to CFD stock trading? Read about long positions vs. short positions.

November 2021: 36,000+ points

The optimism after the COVID-19 pandemic and stimulating fiscal measures were crucial for the DJIA, which soared past 36,000 points for the first time in November 2021.

Companies such as Apple, Microsoft, Amazon, and Johnson & Johnson in the tech and healthcare sectors headed the gains.

January and February 2024: 38,000+ points

Dow Jones Industrial Average (DJIA) all-time high in February 2024

DJIA hit 38,000 points on January 22, 2024, and then 39,000 points on February 22.

Strong growth of key stocks—Apple, Microsoft, Intel, and Salesforce—and favorable Federal Reserve policies, led to a surge in the Dow Jones Industrial Average.

» Dates aren't just useful for historical overviews: learn to read an economic calendar to enhance your trading

Factors Driving the DJIA to All-Time Highs

Several factors drive increases in stock exchanges, such as the DJIA:

  • Historical: GDP, unemployment levels, and inflation.
  • Business performance: Increased corporate profits, overall strong economy.
  • External factors: Technical advancements, health issues such as pandemics, and geopolitical factors.

For instance, new technological breakthroughs boost investor sentiment, but geopolitical struggles such as conflicts, electoral insecurity, and global pandemics can harm market dynamics.

The Significance of DJIA All-Time Highs to Investors

When the DJIA posts a new ATH, investors usually react positively. As the stock exchange rises and signals market strength, it creates optimism and attracts new investments.

However, there are challenges in using DJIA ATHs to indicate future market trends. While they may suggest resilience within the market, investors should still research and consider other key factors, like the global economy, geopolitical events, and company performance.

Finally, not every investor is optimistic about DJIA's all-time highs. More cautious ones get concerned about market corrections caused by overvaluation.

» Not sure what to do when trading is high? Learn if you should buy or sell in bullish markets

Reaching New Heights

The DJIA continues to reach new heights during the 21st century. Most all-time highs are marked by strong economic performance, technological advances, or industry breakthroughs. When the DJIA sets a new ATH, it often indicates financial strength.

Still, there are always reasonable fears of overvaluation and market corrections during periods of strength. Though the Dow Jones Industrial Average remains one of the leading stock market indices, an all-time high is no shortcut for due diligence. Yes, for the most part, it can be an exciting time for investors, but proper research and a well-defined strategy are the only constant in trading.