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How the Dow Jones all-time high compares to stock market leaps throughout history

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How the Dow Jones all-time high compares to stock market leaps throughout history

The Dow Jones industrial average finished above 40,000 for the first time on Friday afternoon, doubling where the index hit shortly after Donald Trump became the 45th president.

The Dow flirted with this latest milestone in April. But the historic peak was delayed by strong economic news, an upturn in March inflation data and statements from Fed officials suggesting interest-rate cuts wouldn’t be coming soon.

Conversely, an encouraging drop in inflation reported earlier this week helped to fuel this latest rally. Consumer prices rose 3.4% from last April – a decline from March’s 3.5% annual increase. The CME FedWatch Tool shows investors still expect the Federal Reserve to cut interest rates twice by the end of the year.

These big, round numbers don’t mean much, but they do serve as a reminder that over time stock investments can pay off. The S&P 500 has returned about 10.6% annually for the past 100 years, according to analysis from Trade That Swing.

How often the Dow doubled in the past four decades

The Dow Jones Industrial average has doubled every 8.1 years, or 2,969 days, since 1983. Before that, it took more than 24 years for the index to double from 625 in the spring of 1959 to September 1983.

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That means if you had invested in a fund in 1983 that mirrored the Dow Jones industrial average, $1,000 would now be $32,000, or $10,500 in 1983 dollars. And that doesn’t include reinvested dividends.

The list of 30 companies that make up the Dow has evolved with the economy over the past 40 years, as it has throughout its 139-year history. Consider the handful of technology stocks such as Amazon and Apple that have replaced names like Eastman Kodak and Sears Roebuck.

What 30 stocks are in the Dow Jones industrial average

Here’s a look at each period where the Dow Jones industrial average doubled since the index topped 1250 for the first time in September 1983.

We’ve included a few key shocks to the stock markets along these timelines in addition to the presidents who were in office. Admittedly the steady hands of the Federal Reserve chairs during those eras likely had greater sway over the success of the markets than whoever was in the White House.

Dow 1250 to 2500: 1,394 days

Dow 2500 to 5000: 3,049 days

Dow 5000 to 10,000: 1,224 days

Dow 10,000 to 20,000: 6,512 days

Dow 20,000 to 40,000: 2,669 days

What does Dow at 40,000 mean for my 401(k)?

While the 40,000 milestone is attention-grabbing, the number itself means little to investors.

“40,000 is a great milestone, but end of the day there isn’t much difference between 39,999 and 40k,” Ryan Detrick, chief market strategist at Carson Group, said in a statement emailed Thursday. “Still, this is a great reminder of how far we’ve come. Read more about what the milestone means here.

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