Dow Jones Industrial Average DJIA Hits Milestone
The Dow Jones Industrial Average DJIA hit a milestone on Wednesday that some have called, “long awaited.” And if 64 days qualifies as a long wait, Dow 20k would certainly meet that standard, but in reality there are probably cricket games that have lasted nearly as long as that! Wednesday was indeed the first close above the much-anticipated 20,000 mark for the Dow Jones Industrial Average DJIA, and it comes just 64 days since the market’s first close above 19,000 all the way back on November 22nd, 2016.
This latest 1,000 point rally is indeed among the fastest on record, bested only by the blazing fast traverse from 10,000 to 11,000 that ended in May 1999 just 35 days after it began. By comparison, it took nearly two years (700 days to be exact) for the Dow to travel from 18,000 to 19,000, and that was frankly much more in line with the average duration for a 1,000-point rally going back to 1972. Each 1,000-point milestone for the Index is outlined in the table below, along with the date the move occurred, the number of days it took to rally from the previous milestone, the percent move, and a column titled “Normalized performance”.
The “Normalized Performance” data point is our attempt to allow a 1,000 point move on a 9,000 point index (11% rally) to be more easily compared to a 1,000 point move on a 19,000 point index (5% rally). To do this, we simply divide the return of the index (i.e. 11% or 5% in the previous examples) by the number of days needed to accomplish that rally. We then multiply that number by 100 days to generate a rate of return that will look a bit more familiar. Through this calculation we can describe the Dow’s rally from 18,000 to 19,000 over 700 days to have taken place at a 0.79% rate of change (per 100 days). Meanwhile, the aforementioned 1,000-point rally in mid-1999 that took little more than a lunar cycle, produced a 28.57% rate of change. Most other rallies were somewhere in between these two examples.
Through this lens we would find the most comparable rallies to the one just seen in the Dow to be the move to 14,000 in mid-2007, the move to 8,000 in mid-1997 and the march to 5,000 concluding in late-1995. All of these produced a rate of return in the 8-10% vicinity. By this standard, this was the 6th steepest 1000 point rally for the Dow since it crossed 1000 for the first time in November 1972.