Dow hits 17,000!

What happened when Dow hit previous major benchmarks?

The Dow Jones Industrial Average breached 17,000 for the first time in its history today. The index has seen exponential growth since the bull market began in 1982, interrupted by three major crashes —the most dramatic of which, on Oct. 19, 1987, had the least long-term impact.

The Dow first touched the 1,000 mark on Jan. 18, 1966, but could not maintain that level as the market hit a long bear consolidation phase that lasted until 1982. It wasn’t until after 1982 that the market could remain above the century mark.

Twenty-one years after first touching 1,000, the Dow hit 2,000 on Jan. 7, 1987. In July 1990, the Dow hit 3,000. It would take nearly five years for the Dow to reach 4,000 in February 1995, but by this time the go-go 90s were under way and it was a straight shot up until the dot-com bubble imploded in 2000.

Equities rebounded from there, but one bubble led to another and in 2008 the housing sector crashed along with the Dow in the credit crisis, leading to the “Great Recession.”

While the economy and job market have not rebounded to pre-crisis levels, stocks sure have with the help of the Federal Reserve.

We thought it would be fun to see what was going on when the Dow hit each 1000-point milestone.

 



16,000: Nov. 18, 2013:

This level was reached in one of the strongest years on record, but with great volatility in the second half as threats of a government shutdown and Ben Bernanke announcing plans to taper QE3 by year-end added volatility.
 

Fun fact: In 1307, on this date, William Tell reputedly shot an apple off his son’s head. Analysts say going long equities was like shooting fish in a barrel with QE3 supporting the market.


15,000: May 3, 2013

Equity markets flew straight up in the first part of the year as it appeared the long awaited rebound had finally arrived.

Fun fact: 1802: Washington, D.C. is declared a city.

 


14,000: July 17, 2007

This milestone was reached just days before we lost our innocence. A few days later, two Bear Stearns hedge funds would implode, signaling the start of the credit crisis. Savvy investors knew something was wrong, but many others didn’t see what was coming until more than a year later when on Sept. 15, 2008, Lehman Brothers went under. It would take nearly six years, until January 2013, for the Dow to return to the 14K mark.
 

Fun fact: 1955: Disneyland is opened in Anaheim, Calif., by Walt Disney.

 Image courtesy of the Orange County Archives 

13,000: May 25, 2007

It was at this point when analysts were debating whether this was a new secular bull market or whether we returned to the days of irrational exuberance. Few people know that doom was on the horizon. The Dow would not reach this level again until February 2012.
 

Fun fact: 1977: Star Wars (later retitled Star Wars Episode IV: A New Hope) debuts in theaters.

 

 

 

Image courtesy of Steve Wilson.

 

12,000: Oct. 18, 2006

It took more than six years, but the Dow finally recovered ground lost in the dot-com bubble implosion.
 

Fun fact: 1851: Herman Melville’s The Whale is first published in England—it will later be better known as Moby Dick.

 



11,000: May 3, 1999

It took 70 years from when the Dow Jones Industrial Average was first calculated until it hit the century mark. It took another 21 years from when it went from 1,000 to 2,000, but it took less than two months to go from 10,000 to 11,000. The Dow would not touch this level again after the 2000 crash until January 2006.
 

Interesting fact: The southwestern portion of Oklahoma City, Okla., is devastated by an F5 tornado, killing 45 people, injuring 665, and causing $1 billion in damage. The tornado is one of 66 from the 1999 Oklahoma tornado outbreak. This tornado also produces the highest wind speed ever recorded, measured at 301 +/- 20 mph (484 +/- 32 km/h).

 

10,000: March 16, 1999

In 1999, we were in the midst of a new paradigm where price earnings ratios didn’t matter. Some analysts were calling for Dow 35,000, and laughing at those Chicken Littles warning of an impending crash.  

Many bears were out of the market and could go bargain hunting after the 2000 crash. The Dow would return to this level after the by December 2003.
 

This date in history: 1995: Mississippi formally ratifies the Thirteenth Amendment (abolishing slavery), which was originally introduced in 1865.

9,000: Apr. 3, 1998

Things were so good and since it was determined that the market only goes up, we could afford to repeal those pesky “Great Depression” era reforms such as the Glass-Steagall Act, which prevented commercial banks from proprietary trading. What could go wrong?
 

This date in history: 1968: Martin Luther King, Jr. delivers his “I’ve Been to the Mountaintop” speech.

 

 

Image courtesy of Mike Licht and the Libraary of Congress


8,000: July 8, 1997

The market doubled in two and a half years and grew by a factor of 4x in a decade.
 

This date in history: 1942: The Dow Jones closes at 41.22, its lowest point during the Great Depression.

 


7,000: Feb. 13, 1997

The market wasn’t scared off by the maestro’s comment months earlier as it continued on its bull romp endlessly higher.
 

Fun fact:The final original “Peanuts” comic strip runs in newspapers on this date in 2000; a day after Charles Schulz’s death.

 

 

 

 

Image courtesy of Andrew Kuchling

 


6,000: Oct. 4, 1996

Everyone likes a bull market but this was getting ridiculous, and it even made Federal Reserve Chairman Alan Greenspan get nervous. A couple months later he would utter his famous line on “irrational exuberance.”
 

This date in history: 1582: Pope Gregory XIII executes the Gregorian calendar, causing the calendars in Italy, Poland, Portugal, and Spain to jump from Oct. 4 to Oct. 15.

 


5,000: Nov. 16, 1995

Here is where the market went from bull to hyper-bull. It took five years for the Dow to rally from 3K to 4K but less than two months for it to move from 4K to 5K.
 

Fun fact: 1914: The United States’ Federal Reserve opens.

 

4,000: Feb. 23, 1995

The recession of 1990-91, which led to the election of President Bill Clinton, was in the rearview mirror, the economy was growing along with the Dow and the largest worry was potential inflation causing the Fed to raise interest rates to 6% in 1995.
 

Fun fact: 1896: The Tootsie Roll is invented.

 

Image courtesy of Windell Oskay


3,000: July 13, 1990

Black Monday was years in the past and equities resumed its bull run. This was in the days when the Dow turning its speedometer meant something. I was on the floor of the CBOT bond room and all the traders in the pit stopped trading and started cheering as the print indicating the Dow hit 3000 went up on the board.
 

Fun fact: 1923: The Hollywood sign is officially debuted in California.



2,000: Jan. 7, 1987

The Dow was flying in the midst of a five-year long bull market but danger was just around the corner. Seems wise to take profits after the Dow hits a milestone, as later that year it would see its largest single day drop to date.
 

Fun fact: 1610: Galileo first observes the four moons of Jupiter (“the Gallilean moons”): Ganymede, Io, Europa and Calisto.

 


1,000: Jan. 18, 1966

After 70 years of calculation, the DJIA hit the 1000 mark. The celebration would be short-lived as the market would soon thereafter enter a bear phase. It would take six year for the Dow to reach that mark again, in November 1972, and then it still could not hold it. Four years later, in February 1976, the Dow hit the century mark once again only to fall back. It touched 1000 again in November 1980 but it wasn’t until October 1982 that it left the 1000-point mark in its shadow.
 

Also on on this date: Robert C. Weaver was confirmed as 1st black cabinet member taking charge of  the newly formed Department of Housing and Urban Development (HUD).

About the Author

Editor-in-Chief of Modern Trader, Daniel Collins is a 25-year veteran of the futures industry having worked on the trading floors of both the Chicago Board