Closing Milestones of The Dow Jones Industrial Average - Milestone Highs and Lows

Milestone Highs and Lows

Like most other stock market indices, the Dow undergoes periods of general increase and general declines or stagnation. A bull market is a term denoting a period of price increases, while a bear market denotes a period of declines. Wall Street generally considers a bear market in session when the main stock market index is more than 20 percent below its all-time high.

There are two types of bull markets. A secular bull market is a period in which the stock market index is continually reaching all-time highs with only brief periods of correction, as during the 1990s, and can last upwards of 15 years. A cyclical bull market is a period in which the stock market index is reaching 52-week or multi-year highs and may briefly peak at all-time highs before a rapid decline, as in the early 1970s. It usually occurs within relatively longer bear markets and lasts about three years.

The following are the secular bull and bear markets experienced by the Dow since its inception:

• 1896–1929: Bull market. In the summer of 1896 the Dow sheds 30% to set an all-time low of 28.48, but quickly erases its losses, and eventually grows to a closing high of 381.17 (theoretical intra-day high of 386.1) on September 3, 1929.
• 1929–1949: Bear market. The stock market crash of 1929 precedes the Great Depression. The Dow plunges to 41.22 (theoretical intra-day low of 40.56) on July 8, 1932, thus erasing 36 years of gains. Although cyclical bull markets occur in the 1930s and 1940s, the index would take 22 years to surpass its previous highs.
• 1949–1966: Bull market. The Dow posts impressive growth in the booming economy following the Second World War. Starting from about 150 in June 1949, when P/E ratios reach multi-decade lows, the index ends just five points below 1,000 on February 9, 1966.
• 1967–1982: Bear market. Traders deal with a stagnant economy in an inflationary monetary environment. The Dow enters two long downturns in 1970 and 1974; during the latter, it falls nearly 45% to the bottom of a 20-year range.
• 1982–2000: Bull market. The Dow experiences its most spectacular rise in history. From a meager 777 on August 12, 1982, the index grows more than 1,500% to close at 11,722.98 by January 14, 2000, without any major reversals except for a brief but severe downturn in 1987, which includes the largest daily percentage loss in Dow history.
• 2000–present: Bear market. The index meanders and then plunges to a closing low of 7,286.27 on October 9, 2002. A cyclical bull peak at 14,198, reached exactly five years later, does not surpass the inflation-adjusted 2000 high. A renewed bear is recognized in summer 2008 and multiple volatility records are set that autumn. Another acute phase in early 2009 brings the index to new 12½ year lows south of 6,469, for a total loss of 54% in less than 18 months. The Dow remains volatile during its ensuing climb, losing almost 20% during the summers of 2010 and 2011, but more than doubles from its low to four-year highs above 13,300 on May 1, 2012 before entering another summer correction.