The Dow Jones Just Hit an All-Time High Here’s Why It Could Beat the Nasdaq in 2024. The Motley Fool
Posted by admin | Filed under Forex Trading
Tesla, meanwhile, is looking to produce and sell aless expensive version of its Model Y SUV in China starting next year, according toReuters, as the U.S. company grapples with its loss of market share in the country. The company competes in China against homegrown EV rivals Nio (NIO), BYD, and XPeng (XPEV) as well as Elon Musk’s Tesla (TSLA). The Chinese EV makers have been locked in a price war with its rivals which has weighed on its earnings, according to reporting from Reuters. The company said it expects total revenues to be between 23.4 billion yuan ($3.2 billion) and 24.7 billion yuan, representing a year-over-year decrease of 8.7% to 3.5%. That was below Visible Alpha estimates of 33.5 billion yuan in revenue for the quarter. Even so, they noted the economy has already “lost some steam in early 2025,” which, combined with tariff uncertainty and federal government job cuts, could take a toll.
Bank Stocks Tumble on Recession Jitters
- In recent decades, the worst decline was a 49% peak-to-trough slide during 2008, amid the Great Recession, and the S&P tumbled 30% or more in four other years since 1980, according to J.P.
- It’s way too early to say the economy is destined for a recession, a deep downturn typically marked by mass job loss, bankruptcies and foreclosures.
- The longest bull market in history lasted approximately 11 years, starting in March 2009 and ending in Feb. 2020.
- Many records were set in 2019, thanks partly to trade talks with China that boosted firms in the index.
US stocks retreated again on Tuesday, failing to rebound from Monday’s steep losses. The Dow dropped about 400 points (around 1%) and Forex timeframe the Nasdaq dropped again after its worst day in two and a half years. Just 20 days ago, the US stock market was sitting at all-time highs.
Shares of DocuSign (DOCU) surged Friday morning after the electronic signature company topped analysts’ estimates for the final quarter of fiscal 2025. Despite today’s big gains, Semtech shares are down nearly 40% since the start of 2025. Crown Castle shares were up 10% in recent trading and were among the biggest S&P 500 gainers today.
- On the data side, US Initial Jobless Claims eased back to 219K for the week ended September 13, down from the previous week’s revised 231K and under the median market forecast of 230K.
- The index peaked again in July, almost reaching 42,000, then rallied in September when the Fed started cutting interest rates for the first time since 2020.
- Indeed, the index has since trended sharply lower, falling below the closely watched 200-day moving average (MA) on its journey into correction territory.
- On that day, it closed at 7,286.27, a 37.8% decline from its peak.
- Shares of DocuSign (DOCU) surged Friday morning after the electronic signature company topped analysts’ estimates for the final quarter of fiscal 2025.
The Dow Jones Industrial Average achieved a new all-time high close of 37,557.92 on Dec. 19. Despite the impressive return, the Dow is still underperforming the Nasdaq Composite and bitbuy review the S&P 500 year to date. The Dow has also underperformed the other two major indexes over the last five-year and 10-year time periods. Investing directly in the Dow isn’t possible, but investors can gain exposure to its performance through index funds or exchange-traded funds (ETFs) like the SPDR Dow Jones Industrial Average ETF Trust (DIA). During the recession around the turn of the 21st century, the DJIA fell from 11,723 in Jan. 2000 to 9,389 in March 2001, dropping 20%.
“In a sense, the market has simply given back (the gains from) the election-fueled rally,” said Rich Drage, senior portfolio manager at RBC Global Asset Management. Buyer exhaustion continues to threaten intraday positions built up from the midweek pullback into 41,500. Powell successfully floated a rebranding of an entire half-percentage-point cut as a “recalibration,” and investors rewarded the Fed’s latest narrative pivot by plowing cash into equities across the board.
Record Highs Set in 2022
Despite Friday’s surge, the major indexes closed lower for the week as President Trump’s moves to impose tariffs have heightened fears that inflation could reaccelerate and economic growth could stall. The S&P 500 and the Nasdaq shed 2.3% and 2.4%, respectively, this week, losing ground for the fourth consecutive week, while the Dow dropped 3.1%, its worst weekly performance in two years. Share repurchases among the S&P 500 companies were 59% higher in the first quarter of 2014 than the first quarter in 2013.
CEO Allan Thygesen said the company is seeing “rapid traction with customers” with its artificial-intelligence powered Intelligent Agreement Management platform it forex basics archives launched last year. DocuSign announced the product last April, saying it would help customers save time and money by creating, organizing, and analyzing contracts more efficiently. The move came after the company announced a strategic and operating review of the unit in December 2023, “with the goal of enhancing shareholder value.”
At the market close on July 19, 2023, the DJIA’s level of 35,061.21 represented a drop of approximately 5.1% from its high posted in Jan. 2022. The Dow suffered a market correction between August 2015 and April 19, 2016, leading to a 2016 downturn. It began on Jan. 4, when the Dow closed 160 points lower as investors worried about a slowdown in China’s economic growth. Of the 26 records set that year, 17 occurred after the presidential election. The index’s 2016 closing high was 19,974.62, set on Dec. 20, 2016. This was the Dow’s third consecutive trading day with a record close and the fourth record closing in just two months.
Many market observers think the S&P 500 is a much better representation of the economy, as it includes 500 companies and draws more widely from different sectors. Previously, the Dow had fallen from 11,723 in January 2000 to 9,389 in March 2001, dropping 20% (from 20,520 to 16,434 points, inflation-adjusted). The bout of inflation that followed the COVID-19 pandemic led to another sharp sell-off in 2022. Between Jan. 7, 2022, and Sept. 30, 2022, the Dow declined about 21% from 36,231.66 to 28,725.51.
It was the largest amount since 2007, right before the stock market crashed. Also at play are Treasury yields, which have declined markedly in the last two months, also a byproduct of investors’ flight to safety. Treasury yields are inversely related to Treasury prices, meaning yields fall as demand for U.S. debt—the market’s closest thing to a risk-free asset—increases. Gold has no yield; investors only profit on gold if its price increases. For that reason, the appeal of Treasurys relative to gold decreases as yields fall, which can help to fuel gold’s rise.
The Dow witnessed a sharp decline in the end of November over fears of inflation and the COVID-19 pandemic, before resuming its quest to break more all-time high milestones. The firm now sees growth averaging 1.7% for 2025, down from 2.4%, with the tariffs creating a drag via higher consumer prices, higher borrowing costs and delayed investment due to uncertainty. Not only has it now given up all of President Donald Trump’s post-election gains, it fell to its lowest level since September and is essentially unchanged over the past seven months. During the fourth quarter, Li Auto posted adjusted earnings per share (EPS) of 10.04 yuan ($1.38), versus 11.46 yuan the same period the previous year. After its worst week in six months, the S&P 500 lost another nearly 3% on Monday.
Stagflation can be worse than recession. Investors are already bracing for it.
A portfolio of 60% stocks/stock funds and 40% bonds/bond funds would have produced a highly respectable average annual return of 9.4% since 1950, according to J.P. For starters, you don’t want to withdraw money from your account, as that would lock in any losses and subject you to taxes. But you might want to adjust your investment mix if you feel the volatility is too much to handle. In recent decades, the worst decline was a 49% peak-to-trough slide during 2008, amid the Great Recession, and the S&P tumbled 30% or more in four other years since 1980, according to J.P.
Historical Milestones of the Dow Jones Industrial Average
Since the Dow tracks just 30 large-cap U.S. companies, some critics argue that it is too narrow to represent the state of the overall U.S. economy. Given its exclusively large-cap focus, the roster of companies included in the Dow fails to include companies of other sizes. Many market observers believe that the S&P 500 is a better representation of the economy, as it includes 500 companies rather than just 30. In the autumn, it began to consistently close above 35,000 points, and by the last week in Dec. 2021, it surpassed 36,000 points.
The Dow Jones Industrial Average (DJIA) made history by surpassing 40,000 points for the first time on May 16, 2024, hitting an intraday peak of 40,051.05 points. The previous day, May 15, 2024, the index had closed at 39,908 points, marking its highest closing value at that time. The stark contrast in valuation shows that premium investors are willing to pay for growth right now. And it also shows that, despite a strong year-to-date return for the Dow, the index is still a fairly good price. The Invesco QQQ Trust’s expensive multiple shows that investors are banking on future earnings, not present earnings.
What does the Dow Jones Industrial Average tell us?
And because of that, Nasdaq stock prices have grown at a faster rate than earnings. One of the largest Dow exchange-traded funds (ETFs), the SPDR Dow Jones Industrial Average Trust (DIA -0.08%), has an average component price-to-earnings ratio of 22.1. That’s compared to 33.3 for the Invesco QQQ Trust (QQQ -0.31%), an ETF that mirrors the performance of the 100 largest Nasdaq stocks. Since posting its all-time high early in 2022, the Dow has seen significant declines and rallies but has been unable to capture that high point as of July 19, 2023.
Plus500AE Ltd is authorised and regulated by the Dubai Financial Services Authority (F005651). Plus500SEY Ltd is authorised and regulated by the Financial Services Authority Seychelles (Licence No. SD039). Plus500UK Ltd is authorised and regulated by the Financial Conduct Authority (FRN ). Never miss a beat with the latest News & Markets Insights on major market events.
Comments are closed.