{"id":169579,"date":"2026-02-08T20:00:21","date_gmt":"2026-02-08T20:00:21","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ca\/169579\/"},"modified":"2026-02-08T20:00:21","modified_gmt":"2026-02-08T20:00:21","slug":"hiltzik-the-dow-hit-50000-points-a-milestone-or-is-it","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ca\/169579\/","title":{"rendered":"Hiltzik: The Dow hit 50,000 points. A milestone, or is it?"},"content":{"rendered":"

The Dow Jones Industrial Average just crossed 50,000 points for the first time, but that doesn\u2019t mean the economy is healthy <\/p>\n

Round numbers always enchant humans, especially when they\u2019re big round numbers. <\/p>\n

So you\u2019ll probably be reading and hearing a lot about how the Dow Jones Industrial Average crossed the 50,000-point threshold Friday for the first time.<\/p>\n

Actually, \u201cthreshold\u201d isn\u2019t the right word. The mark\u2019s significance is psychological, if that. <\/p>\n

In real terms, nothing got triggered at that moment, which happened at about 2:27 p.m. Eastern time. No rules or regulations changed. In and of itself, it won\u2019t create a jump-up in anyone\u2019s personal net worth.<\/p>\n

It\u2019s doubtful that any trading algorithms kicked in, except those that might have been keyed to a sharp reversal of trading sentiment from earlier in the week, when it was pretty sour<\/a>.<\/p>\n

Get the latest from Michael Hiltzik <\/p>\n

Still, the chances are that attention will be paid. The Dow gained 1,206.95 points or 2.47% Friday, closing at 50,115.67.<\/p>\n

If you\u2019re inclined to make a bet, you might put your money on the likelihood that President Trump or his minions will take this to mean the overall economy is firing on all cylinders, thanks to his policies. It doesn\u2019t mean that.<\/p>\n

So let\u2019s dig a little deeper into the meaning of this particular round number. We can start by noting that the Dow not only doesn\u2019t rank as a reliable picture of the U.S. economy, it doesn\u2019t rank as a picture of the stock market as a whole. It\u2019s a price-weighted average of only 30 stocks, with higher priced stocks having a bigger influence on the average, while the Standard & Poor\u2019s 500 index tracks, well, 500, and the Nasdaq Composite more than 3,000. (Both those indices moved sharply higher Friday, too.)<\/p>\n

Yet I confess I have a soft spot for the Dow. That dates from the 1980s, when it was treated as more of an economic bellwether than now, and I was the New York financial correspondent for The Times. <\/p>\n

The Dow had been running up fairly smartly, and I pleaded with the business editor, the revered Paul Steiger, to rescind the rule mandating that I write a story on any day when the average moved 20 points or more. However, I got his agreement that the day it broke 2,000 points for the first time, I would write that story.<\/p>\n

And I did!<\/a> That day was Jan. 8, 1987.<\/p>\n

\u201cIt\u2019s a milestone because round numbers intrigue everyone,\u201d Newton Zinder, chief market analyst for E.F. Hutton & Co., told me at the time. <\/p>\n

William LeFevre, market strategist for the Hartford-based investment firm of Advest, added: \u201cThis will bring a lot of little investors into the market, because the publicity associated with it focuses a lot of attention on the Dow.\u201d<\/p>\n

But as I observed then, hullabaloo over \u201cmilestone\u201d numbers is typically misplaced. The Dow\u2019s first close over 1,000 was greeted with great fanfare on Nov. 14, 1972, when investors and Wall Street professionals read it as a sign that explosive economic growth lay in store for 1973. <\/p>\n

Market analysts were nearly unanimous in forecasting that the Dow could rise an additional 150 to 300 points within two years.<\/p>\n

Sadly, no. It took nearly 10 years, or until October, 1982, for the Dow to reach even 1,100.<\/p>\n

Any optimism the 2,000-point mark inspired also proved to be misplaced. The Dow suffered a major crash of 508 points on Oct. 19, 1987, only nine months later.<\/p>\n

Comparing the trajectories of the U.S. economy and the stock market over the four decades since Dow 2,000 is an interesting exercise. In the first quarter of 1987, U.S. gross domestic product was $4.72 trillion, or $13.77 trillion in today\u2019s dollars. <\/p>\n

Today it\u2019s $31.1 trillion. So the U.S. economy has grown by 558% in nominal terms, or 125% adjusted for inflation.<\/p>\n

In that same period, the Dow Industrial average has grown by 2,400% in real terms, or an inflation-adjusted 758%. The S&P 500 has grown by 2,588% in nominal terms, or an inflation-adjusted 821%.<\/p>\n

Dissertations can be written about what these comparative numbers say about, first, the long-term strength of the U.S. economy and, second, whether its majestic growth in wealth is distributed fairly. But they certainly document that corporate and capital valuations have handily outstripped economic growth generally. The bottom line is that few American households feel as if their wealth has grown by 2,400% in the last 39 years, or even 758%.<\/p>\n

As for whether it\u2019s possible to read conclusions about the economy in the Dow Industrial figures, it\u2019s hard to discern a clear pattern. For one thing, the 30 components change over time, as the average\u2019s owner, a joint venture between Standard & Poor\u2019s, and the financial services company CME Group. <\/p>\n

There\u2019s a bit of gamesmanship involved in these decisions \u2014 the most recent change, in November 2024, substituted chipmaker Nvidia for chipmaker Intel<\/a>. The change kept the average consonant with the evolution of the semiconductor market; Intel shares had lost half their value in 2024, while Nvidia had more than doubled, riding the wave of its dominance over the AI chip market.<\/p>\n

Nvidia validated the average-makers\u2019 instincts: Its gain of 7.78% Friday powered much of the average\u2019s advance. Big percentage gainers included Caterpillar (up 7.06%), Goldman Sachs (4.31%), JPMorgan Chase (3.95%) and Walmart (3.34%). <\/p>\n

Somewhere in there may lie truths about the semiconductor, banking, retail and manufacturing sectors, but one day\u2019s results probably don\u2019t tell the whole story. Nvidia\u2019s gain came on the heels of a nasty week \u2014 the stock had lost 10% of its value since Jan. 29.<\/p>\n

History tells us that its unwise to take solid conclusions from short-term action in the Dow or any other index. Friday\u2019s gains could mark a lasting recovery from the market meltdown of recent weeks, or could be what market followers call a \u201cdead-cat bounce,\u201d and the cat is still dead.<\/p>\n

For the moment, still, the Dow had a very nice day. That doesn\u2019t mean the euphoria will last.<\/p>\n","protected":false},"excerpt":{"rendered":"The Dow Jones Industrial Average just crossed 50,000 points for the first time, but that doesn\u2019t mean the…\n","protected":false},"author":2,"featured_media":169580,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27],"tags":[4937,81383,81386,217,28219,9831,2424,38710,48,52,51,47,50,49,1741,1417,81384,29071,3044,81385,7041],"class_list":["post-169579","post","type-post","status-publish","format-standard","has-post-thumbnail","category-los-angeles","tag-average","tag-chipmaker-nvidia","tag-component-change","tag-day","tag-dow","tag-first-time","tag-friday","tag-gain","tag-la","tag-la-headlines","tag-la-news","tag-los-angeles","tag-los-angeles-headlines","tag-los-angeles-news","tag-lot","tag-point","tag-round-number","tag-stock-market","tag-story","tag-threshold-friday","tag-u-s-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/169579","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/comments?post=169579"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/169579\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media\/169580"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media?parent=169579"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/categories?post=169579"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/tags?post=169579"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}