On Friday, the day that makes countless hearts race, the Dow Jones Industrial Average (referred to as 'Dow') leisurely crossed the threshold of 45,000 points. Although it couldn't relax and enjoy a cup of coffee there before moving on, this wave of operations is enough to keep the stock market carnival in 2024 lively, with major indices also refreshing their peak values.
However, that being said, these 'thousand-point milestones' that are frequently brought out for champagne celebrations now look like a child's growth spurts, with each progress being just a little bit, but that excitement is becoming harder to find. After all, with each step taken, the percentage growth feels like diluted juice, increasingly lacking in flavor.
JJ Kinahan, the big shot at IG North America and the head of Tastytrade, casually remarked at the beginning of the month: '45,000 points? Hey, this isn't a major psychological breakthrough, but it's like a barometer for the U.S. economy; when the big stocks inside look up, the entire market has to shake a bit.'
By Friday, the Dow seemed to be rushing to a venue, hitting a high of 45,071.29 points during the shortened trading day, finally wiping its mouth with a gain of 188.59 points, which is 0.4%, taking a nap at 44,910.65 points. This marks its 47th historical record broken this year, with a cumulative increase of 19.2%, dizzying indeed. The entire index also didn't want to be outdone, rising by 0.7%, setting a new closing high for the 53rd time this year, with a year-to-date increase heading straight for 26.5%.
After Thanksgiving, the market seemed a bit sluggish, and on Friday, trading wrapped up early at 1 PM as everyone was busy digesting their turkey feast. If the Dow could put in a little more effort that day and reach 45,000 points, it would have jumped from 44,000 points in just 13 trading days, a speed that ranks third in history, just behind that 8-day sprint from 25,000 to 26,000 points, when a 4% increase could excite people.
The Dow is tracking the performance of 30 major U.S. companies. These component stocks have changed over fifty times in a hundred years, with the most recent being Nvidia (NVDA.US) pushing Intel (INTC.US) out. Look at the current status of tech stocks in the Dow; they are rising like sesame flowers.
Kinahan also said: 'Back in the day, the Dow was filled with manufacturing and automotive big shots, but now it’s all heavyweights that impact the economy.' This change allows the Dow, a century-old establishment, to stir up a small whirlwind on Wall Street every time it breaks through a thousand-point milestone.
But Matt Stucky from a North American wealth management company doesn't think so. He believes we need to look at the problem from a different angle, not just focusing on the points, but on the percentage increase. Now these integer milestones, breaking through them feels like a game, and the percentage increase isn't as thrilling as before.
Speaking of which, ever since the Dow crossed the 40,000-point mark, for every 1,000 points increase, the growth has been less than 3%. Back in 2017, that was a sweet 5%, and in the late 90s, it was even a 10% frenzy.
So, those investors who are fond of big integer milestones, can we broaden our perspective a bit? The 50,000-point mark is waiting for us, just an 11% increase away. By then, we can pop the champagne, it won't be too late!
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