The Dow Jones Industrial Average (DJIA) index crossed the 40,000 point-level for the first time in history last Thursday and closed above this symbolic milestone the following day. The recent rally in the DJIA and the other major US benchmark indices (namely the S&P 500 and the Nasdaq) has been fuelled by fresh data showing inflation is finally easing once again. This would allow the Federal Reserve to begin its long-awaited interest rate cuts expected as from September.
Although the DJIA is a price-weighted index as opposed to an index based on market capitalisation and, therefore, not a best representation of the largest companies within the US market, it is nonetheless interesting to monitor the major events over recent years since the DJIA first hit the 20,000-point milestone during the first week of Donald Trump’s presidency in January 2017. After surpassing 20,000 points at the start of 2017, the DJIA index climbed by just under 50% to a pre-pandemic high of just over 29,500 points in February 2020 but dropped back in a spectacular fashion, with a decline of 38% in a few weeks during the start of the pandemic to a low of 18,213 points recorded on March 23, 2020. The DJIA index then jumped by an extraordinary 65% in eight months to above 30,000 points in November 2020, following the significant support from governments and central banks which boosted investor confidence.
Earlier that month, Joe Biden had been elected to replace Donald Trump as US president. The momentu.