The Dow Jones Industrial Average, also known as the Dow or DJIA, tracks 30 well-known and large companies that trade on the New York Stock Exchange (NYSE) and NASDAQ. The Dow all-time high was 29,551.42 points logged on Feb. 12, 2020.
Primarily, rate cuts in 2019 and pending trade wars in early 2020 helped further bolster the index. However; it may be a while before another Dow Jones all-time high is hit; as of April 2020, the market has since seen a decline, signaling a shift to a bear market.
- The Dow Jones all-time high of 29,551.42 was reached on Feb. 12, 2020, a result of the longest bull market in history.
- The biggest cumulative loss suffered by the DJIA was during the Great Depression, when it lost nearly 90% of its value between 1929 and 1932.
- However, its largest single-day drop of the Dow Jones happened during the Great Recession of 2008.
Dow All-Time Highs
The DJIA has consistently hit new highs over the last decade or so. The most recent Dow all-time high of 29,551.42 was logged during the longest bull market in history. This bull market of 11 years started on March 11, 2009, and ended on March 11, 2020.
The DJIA hit several new highs in 2019, thanks in part to trade talks with China. The index hit 22 record closes in 2019. The Dow has a storied history, introduced in its initial form in 1885.
Dow All-Time Lows and Plunges
While the recent decade has shown strong economic growth, leading to plenty of record highs for the Dow, there have been significant plunges as well, both over periods of time and in dramatic single-day or single-moment drops.
Periods of Dow Jones All-Time Lows
Perhaps the most infamous cumulative period of hardship was during the Great Depression, in which the Dow lost about 90% over the course of just three years. It hit a low of 41.22 in 1932.
Since the Great Depression, the Great Recession of 2008 has been the most dramatic period of collapse for the DJIA. The market fell over 50% in just a year-and-a-half, due to the mortgage and credit crisis.
During the 2001 recession, the DJIA fell from 11,723 in Jan. 2000 to 9,796 in March 2001, falling 17%. The recession from 1973 to 1975 was also especially troublesome for the DJIA, falling 45% from its 1,051 peaks in 1973 to just under 600 in 1974. The Dow Jones also lost 26.5% during the Cuban missile crisis of 1962.
Single-Day Dow Jones Drops
The largest single-day drop for the Dow happened during the Great Recession on Sept. 29, 2008. Significant drops in the past decade, in reverse chronological order, include:
- Feb. 5, 2020: The Dow fell 1,597 points, losing about 6.26% of its value.
- Aug. 24, 2015: The Dow lost 1,089 points, about 6.6% of its value.
- May 6, 2010: Known as the "flash crash" of 2010, the Dow fell 998 points and dropped over 9% during a period of about 36 minutes, before quickly rebounding.
- October 6, 2008: The Dow suffered its biggest intra-day loss of 800 points or 7.7% on this day. The DJIA recovered by the end of the day, with a total net loss of about 3.5%.
- September 29, 2008: The largest single-day drop in history at closing, the Dow lost 777 points, approximately 6.98% of its value.
Technology and the DJIA
Calculation of the index has become more accurate over the years thanks to the help of technology and electronic trading. Before 1992, the index high was calculated using the intraday trading highs of each component stock, even though the highs for all 30 companies were likely not reached at the same time. This is known as the Theoretical Dow Jones Index. In January 1992, the Dow Jones calculation was changed to record the value of the index at 10-second intervals throughout the day, giving it a more realistic measure.
Though the calculation method has changed since the index was first calculated on the DJIA inception date of May 26, 1896, it is still looked to as a broad indicator of the strength of the U.S. stock market. As the Dow Jones Industrial Average tracks 30 of the largest U.S. companies, investors look to these new highs as signals of market strength.
Since the index was first recorded 124 years ago at 40.94, it has had a 5.24% annualized return, illustrating that even if the Dow Jones sees drops along the way, there is growth for long-term investors.