The Dow Jones industrial average closed above the 20,000 mark for the first time Wednesday, the latest milestone in a record-setting drive for the stock market. The other major U.S. stock indexes were also moving higher, led by banks and other financial companies.
The market has been marching steadily higher since bottoming out in March 2009 during the Great Recession. The rally continued after the election of Donald Trump to the presidency.
What is the Dow?
The Dow Jones industrial average is an index of 30 major publicly traded companies designed to reflect the broad U.S. economy. The Dow is populated by corporate giants like Apple, Exxon Mobil and McDonald’s.
Why is it rising?
The Dow climbs when its member stocks rise, which happens when investors expect those companies’ profits to grow. Goldman Sachs, JPMorgan Chase and other Dow components have rallied as the Trump administration moves to scale back government regulations and cut corporate taxes.
What does Dow 20,000 mean to my 401(k) or IRA?
That depends on what securities your retirement accounts hold. A rally in the Dow may not be reflected in a retirement account invested in bonds or precious metals. Accounts holding large-capitalization stocks could see a benefit.
What does it mean to me if I don’t have any stock investments?
Strength in the Dow reflects optimism about the U.S. economy at least in the short term. Those expectations can translate to hiring and economic expansion of businesses in general.
What does it mean to the LI economy?
Though no Dow components are based on Long Island, some have units here, contract with local companies or employ commuters from Nassau and Suffolk counties. And many Long Islanders work on Wall Street, whose health is signified by the strong Dow.
What do analysts say?
In and of itself, it is just a number, but what it does is it lifts market expectations, in essence, to continue moving higher.– analyst Quincy Krosby, market strategist at Prudential Financial