The Dow Jones just hit 30,000 and it must sting President Trump
By Charles Heighton – The London Financial Markets Editor and VP of Trading at King’s Global Markets
The US president has had an unhealthy and irregular obsession with the US stock indices and on Tuesday this week, one of them hit an all-time high of almost mythical status. The Dow Jones hit 30,000 and closed above this level.
The irony here is that the Dow only rallied so aggressively, because President Trump signalled late on Monday that he is allowing the transition process to go ahead, enabling the Biden team to fully prepare to take over. This was a big step after weeks of denial regarding the election result. His beloved markets loved the president moving a stage forward from denial to acceptance. He was presumably not expecting this kind of reaction from his beloved stocks. Instead of tweeting about his milestone, the President held a press conference, claiming credit for this milestone. Credit that he does not deserve.
The Dow Jones reaching this level is particularly interesting, as the Index has suffered this year. Most of its constituents are not tech companies that have soared in the Covid crisis. Instead, it includes companies like Chevron, Boeing, and Goldman Sachs. The below chart compares the gains and losses of the three major US indices in 2020. The Dow is up only 4% and is the worst performer. The NASDAQ in the same period has achieved nine times the return.
Source: https://uk.tradingview.com/symbols/DJ-DJI/ [The above chart indicates the Index data for NASDAQ 100, S&P 500, DOW JONES]
The Dow has been expected to reach 30,000 for a long time and has almost become part of market folklore. There is even merchandise that urged the Dow to this level for the true bulls. Now that it has finally arrived in 2020, it is almost underwhelming. This year was expected to be the one where the Dow reached 30,000 and it has happened, although no one could have predicted the journey it has taken to get there. The question is will it remain above this level for long or will the unpredictability of 2020 strike again…
What do you think? Let us know in the comment section below!
Interested in writing for us? Click on the 'Write For Us' button at the top of the page!