The Dow Jones Industrial Average closed above the 36,000 mark for the first time Tuesday following a gain of about 140 points, or 0.4%. On Monday it had briefly risen above 36,000 but didn’t end the day there.
Investors had to wait only a little more than three months for the Dow to climb from its last thousand-point milestone – 35,000 – to this one. But for some, the Dow 36,000 vigil has been going on for 22 years.
The Dow 36K prediction was first made by journalist James Glassman and economist Kevin Hassett in October 1999. The Dow was hovering just above 10,000 when their book, “Dow 36,000: The New Strategy for Profiting From the Coming Rise in the Stock Market” was published.
(Glassman, whose journalism career includes a stint as moderator of CNN’s Capital Gang in the mid 1990s, now runs a public affairs consulting firm. Hassett most recently served as a senior White House economic adviser to President Donald Trump.)
In their book, Glassman and Hassett argued that the Dow could hit 36,000 as soon as 2005. That didn’t happen. Stocks plummeted in the final months of 2000 as the dot-com bubble burst. The market tumbled again after the 9/11 terrorist attacks led to a recession.
Investor sentiment was further depressed by significant accounting scandals at Enron, Worldcom and Tyco, which were once considered market leaders. The Dow hit a low of around 7,200 in 2002. The first two companies
Stocks didn’t get back to pre-bubble levels until 2006, and the market peaked again in October 2007 as the housing market started to unravel.
That ultimately led to the 2008 implosion of Lehman Brothers and the Great Recession. The Dow slid to 6,470 by March 2009. But save for a few minor corrections in the past few years and brief bear market in March 2020 at the start of the pandemic, it’s been mostly going up.
The Dow is hardly the only major gauge of the stock market, however. It has only 30 companies in it, which is why many investors prefer to look at the broader S&P 500 or the Nasdaq as a better Wall Street barometer.
But the Dow, which is now up 18% this year, is still arguably the most famous measure of the ups and downs on Wall Street. The Dow first launched in 1896 with just a dozen companies. It expanded to its current membership level of 30 firms in 1928.
Throughout the past century, the Dow has been home to major American industrial icons. Some, like General Electric (GE), ExxonMobil (XOM) and Pfizer (PFE), have recently been replaced in the blue chip average.
The Dow now reflects the fact that the United States economy is more about tech, consumer goods and financial services as opposed to manufacturing.
Apple (AAPL), Microsoft (MSFT), Salesforce (CRM), Walmart (WMT), Home Depot (HD), Nike (NKE), Goldman Sachs (GS), American Express (AXP) and JPMorgan Chase (JPM) are among the leading companies in the Dow today.