The coronavirus pandemic has sent investors on a rollercoaster ride in 2020. The Dow Jones Industrial Average (DJIA) recorded its biggest one-day point drop in March, which was a little more than a month after its all-time high.
On Sept. 2, the Dow closed at 29,100.50, which was near February’s record high. How high could the Dow go? What's the lowest level the DJIA has ever hit?
History of the Dow Jones Industrial Average
American journalist Charles Dow created the Dow Jones Industrial Average, also known as the Dow Jones or just the Dow, in 1896.
At the time, the Dow’s average included the stock performance of just 12 components, none of which are still included in the index.
The original components included the following:
- American Sugar — a precursor to Domino Foods.
- American Cotton Oil — an ancestor of Unilever.
- United States Rubber Company — an ancestor of Michelin.
- General Electric — a component that lost its DJIA spot in 2018.
What is the record high for the Dow?
The Dow closed at a record high of 29,551.42 on Feb. 12, which was one week before the S&P 500 and the Nasdaq Composite reached their respective record highs.
However, the coronavirus pandemic sent stock prices tumbling. The Dow fell by 2,997 points on March 16 — its worst one-day drop ever, according to CNN — before hitting a year-to-date low of 18.591 on March 23.
Since then, the Dow has been clawing its way back. Earlier in September, the Dow hit 29,100.50, which was just 1.5 percent shy of the record in February.
What is the record low for the Dow?
According to Politico, the Dow fell to its lowest point during the Great Depression. The Dow bottomed out at an intraday low of 40.56 and a closing level of at 41.22 on July 8, 1932.
Politico noted that the Dow’s collapse at the time “reflected panic selling in the U.S. stock market that devastated the holdings of many investors and caused major declines in consumption, industrial production, and employment that reverberated throughout the economy and was felt for nearly a decade.”
Less than a year later, the Dow marked its biggest one-day percentage gain and closed up 15.34 percent on March 15, 1933, according to CNN.
Is there a limit to how high the Dow can go?
As the Associated Press pointed out in 1996, back when the Dow was still under 6,000, there isn't an upper limit to the Dow Jones Industrial Average.
“I don’t know how high it can go, and you should hang up on anyone who tries to tell you,” Alfred E. Goldman to the AP at the time. Goldman was the vice president at A.G. Edwards & Sons Inc.
The Motley Fool’s Sean Williams even said a year ago that it’s a “very real possibility” that the Dow will hit 100,000 by 2035 “if not sooner.” Of course, global pandemics might have other ideas.