Closing milestones of the Dow Jones Industrial Average
This article is a summary of the closing milestones of the Dow Jones Industrial Average, the best-known stock market index in the world. Since opening at 40.94 on May 26, 1896, the Dow Jones Industrial Average has increased steadily, despite several periods of decline.
Milestone Highs and Lows
Like most other stock market indices, the Dow undergoes periods of general increase and general declines or stagnation. A bull market is a term denoting a period of price increases, while a bear market denotes a period of declines. Wall Street generally considers a bear market in session when the main stock market index is more than 20 percent below its all-time high.
There are two types of bull markets. A secular bull market is a period in which the stock market index is continually reaching all-time highs with only brief periods of correction, as during the 1990s, and can last upwards of 15 years. A cyclical bull market is a period in which the stock market index is reaching 52-week or multi-year highs and may briefly peak at all-time highs before a rapid decline, as in the early 1970s. It usually occurs within relatively longer bear markets and lasts about three years.
The following are the secular bull and bear markets experienced by the Dow since its inception:
 1896 - 1929: Bull market. In the summer of 1896 the Dow sheds 30% to set an all-time low of 28.48, but quickly erases its losses, and eventually grows to a closing high of 381.17 (theoretical intra-day high of 386.1) on September 3, 1929.
1930 - 1948: Bear market. The stock market crash of 1929 precedes the Great Depression. The Dow plunges to 41.22 (theoretical intra-day low of 40.56) on July 8, 1932, thus erasing 36 years of gains. From here, the index would take 22 years to surpass its previous highs.
1949 - 1966: Bull market. The Dow posts impressive growth in the booming economy following the Second World War . Starting from about 150 in June 1949, when P/E ratios reach multi-decade lows, the index ends just five points below 1,000 on February 9, 1966.
1967 - 1982: Bear market. Traders deal with a stagnant economy in an inflationary monetary environment. The Dow enters two long downturns in 1970 and 1974; during the latter, it falls nearly 45% to the bottom of a 20-year range. The index approaches the 1,000 milestone at the top of its range three times in 1972, 1976 and 1981, but fails to break the mark decisively.
1982 - 2000: Superbull market. The Dow experiences its most spectacular rise in history. From a meager 777 on August 12, 1982, the index grows more than 1,500% to 11,722.98 (actual and theoretical intra-day highs of 11,750.28 and 11,908.50) by January 14, 2000, with the exception of a slight turndown in the late 1980s.
2000 - 2003: Bear market. The Dow struggles with the 10,000 - 11,000 range for a year and then deteriorates into a panic atmosphere of severe declines punctuated by brief and violent rallies. The index hits a closing low of 7,286.27 (actual and theoretical intra-day lows of 7,197.49 and 7,181.47 the following day), 38% below its highs, on October 9, 2002. The records of early 2000 stand until the fourth quarter of 2006.
2003 - 2007: Bull market. Beginning around the time of the U.S. intervention in Iraq, a rise in oil prices, metal appreciation, growth in China, a real estate boom, and the initiative for environmentally friendly business plans allow the market to rebound from below 9,000 on the Dow to above 14,000. However, much of the impetus for this growth has come from outside the United States, with foreign investors taking advantage of the weak US dollar. While a cyclical bull market had been widely recognized since 2003, the Dow Theory case for a secular bull market came from concurrent record highs for the Industrials, Dow Jones Transportation Average, and the Dow Jones Utilities taking place on February 14, 2007 for the first time since March 17, 1998. The Industrials and the Transports (but not the Utilities) again closed at concurrent record highs, along with broad market indices such as the S&P 500, on June 1, 2007. The final high of this market, above the 14,000 level and roughly on par with the inflation-adjusted 2000 high, was reached on October 9, 2007.
Present: Bear Market. On July 2, 2008, the Dow closed at 11,215.51, a decline of more than 20% from its record high during the previous bull market, reaching the milestone for a bear market by common definition. Although this may prove to be a cyclical phenomenon, a close below a multi-decade trendline (currently around 10,000 and rising) would strengthen the case for a continuing secular bear.
Incremental Closing Milestones
The following is a list of the milestone closing levels of the Dow Jones Industrial Average, in 100-point increments.
1This was the Dow's close at the peak of the 1929 bull market, a level that the Dow would not see again for 25 years.
See also
Stock market bubble
Stock market crash
External links
Dow Jones Industrial Average Closing Milestones
Century of the Dow
Yahoo: Theoretical DJIA since 1928
MarketWatch: Recent DJIA
Theoretical Dow Jones Index
DJIA on Google Finance
DJIA on CNN Money
Dow Jones Utilities Average - DJUA
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