Dow Jones History
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History of the Dow Jones Industrial Average
1895-1909 1910-1919 1920-1929 1930-1939 1940-1949 1950-1959 1960-1969 1970-1979 1980-1989 1990-1999 2000-2009
When Charles Dow created the Dow Jones Industrial
Average, first published on May 26, 1896, it consisted of a dozen stocks.
Only one of the original 12, General Electric, is in
the average today. And even GE dropped out for a while -- deleted in 1898 but
back nine years later as a replacement for Tennessee Coal & Iron.
U.S. Steel, run by tycoon J.P. Morgan, swallowed Tennessee Coal in a unique
power play, according to historian Robert Sobel. In the panic of 1907, Mr.
Morgan agreed to rescue the economy; President Theodore Roosevelt agreed not to
object to the acquisition.
Several companies in the 1896 average are ancestors of firms active today (see
table). American Tobacco was broken up in 1911 but was the progenitor of such
companies as Fortune Brands and R.J. Reynolds Tobacco. Distilling & Cattle
Feeding Co. became Distilling Co. of America, and later Millennium Chemical.
One original listing, U.S. Leather, was a preferred stock -- a hybrid between a
stock and a bond. Back in 1896, common stocks were considered highly
speculative, Mr. Sobel says. Leather, incidentally, wasn't just used for
clothing back then: Thick leather bands were used for power transmission in
factories.
American Sugar evolved into Amstar Holdings, which sold its sugar business to
Britain's Tate & Lyle PLC and eventually became part of Sweden's Assa Abloy.
Over the years the number of components included in
the average has increased from 12 to 20 to 30 as the U.S. economy has expanded.
The Dow's focus has shifted from agricultural products and basic materials such
as coal, iron, lead, rubber and leather to technology companies, financial
services providers, manufacturers, and retailers.
For more than 100 years, the Dow Jones Industrial Average has been published almost every business day. One big exception was during World War I, when the New York Stock Exchange shut down for 4-1/2 months.
The shutdown began just after the war started in July 1914, as the Big Board followed the lead of European exchanges and closed. The move was unusual because the exchange has rarely suspended trading for more than a day. Since World War I, the exchange has remained open through wars, natural disasters, and economic crises. Even the trading collars applied by the Big Board to slow the market on highly volatile days are viewed with distaste by market participants, and those rarely last more than an hour.
Historians attribute the unusual 1914 decision to the economic theories of British economist Norman Angell. A year earlier, Mr. Angell had written ''The Great Illusion,'' predicting that a major world war would cause a global financial meltdown. The theory: Businesses and governments would liquidate investments and flee to the haven of gold bullion when such a conflict erupted.
The late Robert Sobel, a professor of business history at Hofstra University, said the exchange's board of governors bought this story of doom and gloom. On July 31, the group decided to close the exchange. Trading in all stocks didn't reopen until Dec. 15, and then under restrictions that specified minimum prices. Unrestricted trading resumed in April 1915.
Of course, stock traders abhor a vacuum. Within days of the shutdown, traders and speculators set up shop outside the exchange's Wall Street headquarters. Despite threats of reprisals from the exchange, business was conducted in an open-air black market.
When partial trading resumed in December, stocks moved above their late-July levels. Foreigners did in fact dump stocks on the exchange, but they were snapped up by American investors.
Try talking about the stock market without mentioning the Dow Jones Industrial Average: It is a little like talking about the weather without mentioning the temperature.
It wasn't always that way. For the first 25 years or so of its existence, the industrial average was mostly absent from headlines in the financial press.
In the late 19th century and early 20th century, investors focused mainly on the action of individual stock issues rather than the market as a whole. When they did look at market averages, they were more likely to look at railroad stocks, the blue chips of the day, than at industrial stocks, which were considered speculations.
It was in the Roaring '20s that many investors first became intimately acquainted with the industrial average. That was when masses of average citizens began buying stocks by the bundle. Their enthusiasm carried the industrial average from around 100 in 1924 to nearly 400 by mid-1929.
More than 20 years after it first hit the 100 mark in early 1906, the industrial average broke 200 in 1927. For two decades, the compound average annual gain in the index was an unexciting 3.2%. World War I and a fierce flu epidemic were among the factors that held down stocks in the early part of the century.
But in the '20s, the industrial average set a record in each of six consecutive years from 1924 through 1929. That was the longest such string on record until the current bull market, and by some measures the 1920s bull market was the strongest ever.
Give part of the credit to President Calvin Coolidge, known as Silent Cal. When Mr. Coolidge said, ''The business of America is business,'' he meant it. His hands-off, or laissez faire, policies contributed to the economic and stock-market booms of the time, and certainly had at least an indirect effect on the popularity of the industrial average.
Then, the crash of 1929 thrust the Dow industrials to true prominence. Investors
were hungry for a way to gauge the overall damage, so the Dow industrials made
front-page headlines.
On Oct. 28, 1929, The Wall Street Journal's main headline announced that the ''Industrials'' were ''off 38.33.'' The next day, they fell another 30.57 points. (Those two plunges, of 12.82% and 11.73% respectively, remain the second-highest and third-highest of all time in percentage terms, behind the record 22.61% crash on Black Monday, Oct. 19, 1987.) In six days, the industrial average lost more than 96 points, nearly 30% of its value.
Competition to the Dow industrials began to arrive in the mid-1920s. For example, the forerunner of Standard & Poor's began compiling the performance of 200 stocks on a regular basis in 1926.
Today, there are several more sophisticated indexes. But the public has long since adopted the Dow Jones Industrial Average as its stock-market standard. If you ask the average investor what ''the market'' did today, you can bet that he or she will answer with the performance of the Dow industrials.
It took nearly 22 years for the Dow Jones Industrial Average to rise from 100 to 200. But it took barely over a year for the average to vault the next hundred points.
The industrial average hit precisely 300 on the last day of 1928. It had soared 48% that year, making 1928 one of the best in history. (The only better have been 1915 and 1933.)
''I call it the final fling upward,'' says Richard Stillman, a former professor and author who has written a book on the DJIA. ''This was a great era of euphoria. Prosperity was an explosion: Automobiles were in mass production, radios were in mass production,'' and telephone and aerospace industries were taking off.
Professor Stillman thinks that Herbert Hoover's victory over New York Governor Al Smith in the 1928 presidential race also helped the Dow industrials surmount 300. ''The political climate continued to be highly favorable to business,'' he says. Mr. Hoover favored ''rugged individualism,'' and the less interference in business, the better.
A few weeks before the DJIA hit 300, the editors of The Wall Street Journal, who determine how the average is calculated, made major changes. They increased the number of stocks in the average to 30 from 20. Today, the average still contains 30 stocks, even with periodic replacements.
The 1928 shift paid homage to the growing power of the auto industry. Chrysler Corp. and Nash Motors were both added, as was Bethlehem Steel Corp., which provided metal for the cars, and Texas Corp., which later became Texaco Inc. Other additions were Postum, which made a then-popular beverage; Victor Talking Machines, a phonograph maker; and Radio Corp. of America.
After hitting 300, the Dow industrials would soar further in 1929, peaking at 381.17 in September. But in the crash of 1929 and the Depression, they would plummet. It would take a quarter century -- until 1954 -- before they would surmount the 300 barrier again.
Most investors know that the Dow Jones Industrial Average did miserably during the Depression of the 1930s. It began the decade at 248.48, down from a high of 381.17 before the crash of 1929. By July 1932, the depths of the Depression, the industrial average was crawling at 41.22. It ended 1939 at 150.24.
What many investors don't know is that the 1930s were also the most volatile decade on record for stock prices. Investors, their nerves rubbed raw by the Depression, were prone to fits of euphoria and despair.
Thus, the industrial average plunged 52.7% in 1931 and 32.8% in 1937, but it rose 66.7% in 1933 and 38.5% in 1935. Daily volatility was also intense. Strange as it may seem, seven of the 10 biggest up days in history, on a percentage basis, occurred during the 1930s.
Franklin Delano Roosevelt took office in 1933, instituted social programs and put people to work building roads and public buildings. The history of his administration could serve as a political Rorschach test. Peering at the inky lines, some see Demon Roosevelt, others Savior Roosevelt.
The stock market generally seemed to like FDR's measures. The Dow industrials rose 39 points in 1933, 6 points in 1934, 40 points in 1935 and 36 points in 1936.
Richard J. Stillman, professor emeritus at the University of New Orleans, said in an interview in 1996 that the launch of the Civilian Conservation Corps, the Securities and Exchange Commission and Social Security helped turn the Dow around.
However, the late Robert Sobel, a professor of business history at Hofstra University on New York's Long Island, disagreed. The market was rebounding anyway, and the New Deal provided a psychological, not an economic, boost, he argued.
By 1938 the Dow had fallen below 100 again. Mr. Sobel blamed Mr. Roosevelt, for raising taxes. Mr. Stillman said overseas demand for U.S. goods was weak, as other countries were embroiled in their own miseries. The two historians agreed that World War II was the spark that finally ended the agony. Said Mr. Sobel: ''The war took the country out of the Depression, not Roosevelt.''
During World War II, The Dow Jones Industrial Average took two strong hits that kept it in a slump through most of the war.
The first was in early 1940, when Adolf Hitler's armies were on the march. The alarm caused by his aggression sent the Dow Jones Industrial Average into one of the steepest tailspins in its history as it fell more than 23% in just two weeks.
From a monthly high of 148.17 on May 9, the average fell to 113.94 on May 24. The market, which had been strong, turned nervous after the Nazi army invaded Denmark and Norway in April 1940, several months after Germany had overwhelmed Poland. The Wall Street Journal noted that ''the current stock market is well-charged with psychological dynamite.''
On May 9, the Journal wrote that an invasion of Holland ''would awaken fears that England was about to be attacked.'' The next day Hitler's armies swarmed into the Low Countries of Holland, Belgium and Luxembourg, and were on their way to a quick victory in France.
In the middle of the decline, The Journal's Abreast of the Market column reported that ''while numerous practical-minded individuals in Wall Street take the view that more intense warfare will be stimulating to our industries . . . they recognize the dangers inherent in a swift German victory.''
By June 11, after the German invasion of France was under way and the British had been forced to abandon their defense of northwestern France and Belgium at historic Dunkirk, the Dow changed course and stayed largely on an upward trend for the remainder of the year.
''Once the initial shock of the fall of the Maginot Line was over, you had a recovery,'' said the late Robert Sobel, a historian at Hofstra University. Economic historian Richard Sylla of New York University added that as the battle of Britain was waged, it became clearer that the Royal Air Force would be able to defend Britain, so American investors felt ''they weren't going to wake up the next day and find that Britain had fallen.''
However, more than one year later the war took on a far more personal tone and sent the stock market on a long-term descent.
On Dec. 7, 1941, Japanese planes bombed the U.S. naval base at Pearl Harbor in Hawaii, dragging the U.S. into World War II.
President Franklin D. Roosevelt called it ''a date which will live in infamy,'' and the stock market certainly agreed. The Dow Jones Industrial Average fell 3.5% on Dec. 8, to a 112.52 close from 116.60, and stayed on a downward trend for five months.
Until Pearl Harbor, many Americans hoped the U.S. would avoid direct military involvement in World War II. But the Japanese attack made that impossible.
The attack, which took U.S. forces by surprise, also took the stock market by surprise. Here's how The Wall Street Journal's Abreast of the Market column described the situation: ''The outbreak of hostilities between Japan and the United States came after the close of a week in which stocks had scored the most vigorous advances witnessed in several months. While tension existed in U.S.-Japanese relations, the Street had felt that negotiations between Tokyo and Washington were likely to proceed for some time before the matter came to a head.''
One of the market's big worries was how the war would be financed. It was obvious that the Roosevelt administration would have to raise taxes, borrow heavily or both. This unpleasant situation was described in the Journal as a ''shadow . . . overhanging the landscape.''
On the plus side, however, the U.S. entrance into the war meant ''reshaping the productive machine to assure maximum output for the enemy's defeat,'' as the Journal put it in a front-page article. Some economists believe it was the war effort that finally pulled the U.S. out of the economic doldrums that began in the early 1930s.
The industrial average continued to drift down until it hit bottom in late April 1942 at 92.92. Then it began to recover and chug upward. By year-end 1942 it was at 119.40, and by the end of 1945, the year the war ended, it stood at 192.91. Over the years, that pattern-an initial drop, followed by a rebound-has been the typical pattern when the U.S. gets involved in military conflicts.
The outbreak of the Korean War sent the Dow Jones Industrial Average into a tailspin.
North Korean forces attacked South Korea on June 25, 1950. The industrial average had begun to decline three days earlier, on June 22.
The confrontation had been building since Korea was split along the 38th parallel after World War II. The North fell under the influence of the Soviet Union, the South under the watch of the U.S.
When the 38th parallel was crossed, the U.S. seemed uncertain how to respond. In just under three weeks, the industrial average fell 12%, to 197.46 on July 13.
By July, Gen. Douglas MacArthur had taken command of the United Nations forces assisting the South Koreans, and military supplies were being shipped to the troops. As Gen. MacArthur's victories mounted and his men marched northward, so did the Dow. The industrial average ended the year up 17.6%, and tacked on another 14.4% in 1951.
''The Korean War was a good period for the Dow, but not necessarily all due to the War,'' says historian Richard Sylla of New York University. ''The defense stocks did very well, and the rails did even better because a lot of supplies needed to be transported.''
The Dow industrials dipped again later in 1950, when Chinese forces entered the war on North Korea's side. Fighting continued into 1951 with little hope of a military victory for either side.
Disagreements over U.S. policy toward China spurred President Truman to fire Gen. MacArthur in April 1951. The stock market rose on the news, reflecting the reluctance of Americans to risk a war with China and potentially the U.S.S.R., according to Professor Sylla.
A truce in July 1953 ended the fighting, after 33,651 American soldiers had died. The following year, 1954, the Dow finally reached and passed the levels it had attained before the great crash of 1929.
It took a quarter century for the Dow Jones Industrial Average to crawl from 300 to 400. But in little more than a year, the average sped through the next barrier, 500.
The 500 milestone was reached on March 12, 1956. It was one manifestation of the power in the long-lasting stock-market rally of the 1950s. Until recently, the decade was the best ever for the industrial average, which climbed 239.5% from 1950 to 1959.
Low inflation and low interest rates provided an ideal environment in which stocks to thrive. The spanking new Interstate highway system helped zip goods from place to place, and the new medium of television helped to create an appetite for those goods. President Eisenhower was popular, and the country, for the most part, was in a good mood.
Jeffrey Rubin, director of research at Birinyi Associates in Greenwich, Conn., says that good news about Mr. Eisenhower's health was important in propelling the Dow industrials to a strong month in March 1956. The president had suffered a heart attack the previous fall, and people were wondering whether he would run for re-election. In February, Ike announced that he would, indeed, run.
The 500 level was breached on a day when the headlines told Americans about not just one, but two international crises. In the Middle East, tensions were running high between Egypt and Israel. The situation would erupt into outright warfare later that year during the Suez crisis. Meanwhile, in Cyprus, a general strike was under way, protesting Britain's deportation of Archbishop Makarios, who had led a movement to unite Cyprus with Greece.
Such crises often spook the stock market, at least for a short time. But in March 1956, the bull market shrugged them off.
Some investors active today will remember 1956. DeSoto was still a popular car. ''Hound Dog,'' by Elvis Presley, was a red-hot hit song. In baseball, Mickey Mantle was the most valuable player in the American League. And on television, Robert Young was starring in ''Father Knows Best.''
The space shot that launched mankind's first Earth-orbiting satellite on Oct. 4, 1957, was achieved by the Soviet Union, at the time the archenemy of the U.S. As a result, it was a shot that wounded the U.S. stock market.
The Dow Jones Industrial Average stood at 465.82 on Oct. 3, 1957, the day before Sputnik was launched. By Oct. 22, it had fallen to 419.79, a nearly 10% drop in just three weeks. A feeble recovery ensued, but at year end, the industrials remained 30 points below their early-October level.
The selling reflected decreased confidence among U.S. investors as the Soviets seemed to have captured the technological lead in the space race -- and, people feared, in other areas too.
But the selling wasn't across the board. Aircraft and missile stocks showed some strength, as investors surmised that the U.S. would commit greater resources to those industries. As the Journal's Abreast of the Market column put it, ''some of the aircraft stocks [were] lifted by the Soviet moon.''
On Oct. 10, 1957, the Dow industrials fell 9.69 points, the biggest decline stocks had suffered since President Eisenhower's 1955 heart attack jolted the market two years before. That drop also left the industrials at their lowest point in two years.
Then, on Oct. 21, the stocks took an even worse tumble, with a 10.77-point decline. Brokers and traders blamed the drop partly on U.S. government complacency in the wake of Sputnik; the Pentagon announced plans to cut aircraft procurement, which struck many people as unwise, given the technological prowess the Soviets had just displayed.
Tensions between Syria and Turkey also contributed to the October 1957 declines. Not until May 1958 did the Dow industrials climb back to their pre-Sputnik level.
While fears that the U.S. was losing its technological pre-eminence sparked the post-Sputnik decline, the opposite has been happening lately. Increasing confidence that U.S. companies are the world's technology leaders has fueled the strong stock-market performance of the 1990s.
For a while, it seemed Chicken Little finally might be right.
News of the Soviet Union's move to install offensive nuclear missiles in Cuba jolted the Dow Jones Industrial Average in late-October 1962. The missile crisis shifted into high gear on Oct. 22, when President Kennedy warned that all ships bound for Cuba, from whatever nation or port, ''will, if found to contain cargoes of offensive weapons, be turned back.''
As Soviet ships steamed toward Cuba, fears mounted that Armageddon was near. The president's brother, Attorney General Robert F. Kennedy, called it the worst crisis since World War II. The tension cast a cloud over the stock market, frightening investors who were already unnerved by stocks' poor performance that year. (President Kennedy's confrontation with steel companies accounted for part of the earlier drop.)
Rumors of Soviet activity in Cuba spread as early as August, but the gravity of the situation didn't emerge until October. On the day after President Kennedy's grim Oct. 22 speech, the industrials closed at 558.06, down nearly 2% from the previous day's close-and down 24% from the beginning of the year.
In hindsight, that chilling week was a remarkable buying opportunity. Before the month was over, Soviet leader Nikita Khrushchev agreed to withdraw the missiles, and the Dow industrials began a long upward march.
A year later, at the end of October 1963, less than a month before President Kennedy's assassination, the index stood at 755.23a stunning 35% increase.
''Both superpowers realized, after looking down that nuclear gun barrel at each other, there had to be better ways of resolving their differences,'' says former JFK aide Ted Sorensen, now a New York lawyer. One result: the 1963 nuclear test-ban treaty. But the crisis also brings to mind a wisecrack someone once made: The reason life is extinct on other planets is that their scientists were more advanced than ours.
Cheers rang out on the floor of the New York Stock
Exchange when the Dow Jones Industrial Average crossed the 1000 mark on Nov. 14,
1972.
If ever there was a psychological barrier for the Dow industrials, ''Dow 1000''
was it. The average had knocked on the door of 1000 repeatedly for six years,
but could never close above that ''magic'' level.
For example, the industrials closed at 995.15 on Feb. 9, 1966, and at 985.21 on
Dec. 3, 1968. There were also close calls in May 1969. But no cigar -- until the
euphoria of 1972.
Many investors active today will remember 1972. Richard Nixon was president,
''The Godfather'' was packing them in at the movies, and Americans were tuned to
''All in the Family'' on television. The Watergate scandal, which later
destroyed the Nixon administration, was only a cloud on the horizon. The Vietnam
War was a major problem, but on the day the 1000 barrier fell, North Vietnam had
agreed that its representative would meet with U.S. negotiator Henry Kissinger
for a new round of talks aimed at ending the war.
The re-election of Mr. Nixon over George McGovern had occurred a week earlier.
And the economy was doing well. Economic growth was unusually strong, inflation
was moderate and interest rates were low.
In the stock market, it was the heyday of the ''Nifty Fifty,'' stocks that were
so popular that it was said they were ''one decision'' stocks: Buy them, and
never worry about selling. Among the most popular stocks of the day were Xerox,
Avon, IBM and McDonald's.
Not long after the industrial average punctured the 1000 mark, a recession
occurred and the brutal bear market of 1973-74 set in, pushing the average all
the way down to 577.60 in December 1974. It would be late 1982 -- a full decade
after the 1000 milestone was first passed-- before the industrials rose above
1000 to stay.
It may seem hard to believe after the Dow Jones
Industrial Average has been at 10,000, but it was only a little more than 12
years before, on Jan. 8, 1987, that the average first hit 2000.
You remember 1987. Michael Douglas starred that year in the movie ''Wall
Street,'' portraying the greedy Gordon Gekko.
But the real fireworks in 1987 took place on the real Wall Street. The
industrial average started the year at 1895.95, then staged one of the most
impressive advances in history, surging nearly 44%, and peaking at 2722.42 on
Aug. 25. In the fall it turned around and suffered one of the biggest declines
on record, dropping nearly 1,000 points in two months. The selling crescendo
peaked on Oct. 19, with a 508-point, nearly 23%, crash, the worst one-day drop
ever.
When the Dow industrials surpassed the 2000 mark, almost no one foresaw the
pyrotechnics to come. The prevailing feeling was that, having climbed to 2000,
the average would need to rest for a while.
Alfred Goldman of A.G. Edwards & Sons in St. Louis predicted ''a victory
celebration and then a headache.'' New York money manager Robert Stovall
predicted a ''groundhog day'' effect in which the market would ''see its shadow,
and promptly duck down again.'' Mary Farrell of PaineWebber predicted a
trading-range market hovering between 1800 and 2200.
Nor did many people guess at the time that seven additional millenary milestones
would fall in little more than a decade. After all, it had taken the industrial
average about 76 years to reach 1000, in 1973. Then it took nearly 14 years for
the average to climb to 2000.
Of course, it's easier and easier to hit each 1,000-point milestone, because
each point gain becomes smaller on a percentage basis as the index rises.
''I'm excited. This is history,'' exclaimed trader Jack Baker, then with
Shearson Lehman Brothers in New York, the day the 2000 barrier was snapped. ''I
caught 1000 and 2000 and I hope to live long enough to catch 3000.'' Mr. Baker
captured the prevailing mood. But though hardly a soul suspected it at the time,
the 3000 mark was only four years away.
Who's afraid of Saddam Hussein?
The stock market was, in 1990. Iraq's invasion of Kuwait, and concern about the Iraqi leader's unpredictable behavior, helped spark a 21% decline in the Dow Jones Industrial Average.
It became known as the Saddam Hussein bear market. Although unusually swift, the decline met the classic definition of a bear market: a 20% decline in major stock indexes.
The average had been knocking on the door of the 3000 mark that summer. It stopped a fraction of a point away, with twin peaks of 2999.75 on July 16 and July 17. Then, prices began to slide, ending with an Oct. 11 low of 2365.10.
Iraq invaded Kuwait Aug. 2, and much of the damage in the stock market took place in mid-August, after President Bush had said the invasion ''cannot stand,'' but before it was clear what America would do. Fear that the U.S. might get involved in a prolonged war, or that Mr. Hussein might deploy chemical or biological weapons, helped to spook stocks. As it turned out, the war was quick and resulted in an overwhelming U.S.
victory. On Jan. 17, 1991, after hostilities actually began and the results looked good for U.S. forces, the Dow industrials soared 114 points.
Laszlo Birinyi of Birinyi Associates says the stock market predicted the outcome of the war better than most people did. ''The market as early as October had decided that the war was not going to be an event of lasting significance,'' he says.
Of course, Iraq wasn't the only thing troubling the stock market in 1990. There also was unease about the economic situation. In fact, the U.S. was in an undeclared recession. Not until 1992 did the National Bureau of Economic Research officially recognize that the U.S. had been in a recession from July 1990 to March 1991.
At the end of 1999, the 1990 decline was still considered the last bear market. In the eight years that followed, the biggest dip was 7.2% in October 1997. The market recovered the 554-point drop in less than a month.
When the U.S. once again faced off with Saddam in 1998 over U.N. weapons inspections, the market seemed relatively untroubled. The commencement of air strikes against Iraq was followed by a slight but steady rise in the average that led the Dow past 10000 for the first time.
Talk about a tease.
The Dow Jones Industrial Average seemed to be closing in on the 3000 mark in the
summer of 1990. It looked as if the average would make quick work of the 3000
milestone, about 3-1/2 years after it passed the 2000 mark, in January 1987.
On July 17, 1990, the Dow industrials closed just a quarter point shy of the
next thousand-point mark, closing at 2999.75. The next day, the average shot
above 3000 in intraday trading, only to close unchanged at the tantalizing level
of 2999.75.
Several times during July, the intraday high exceeded 3000, but the industrial
average couldn't manage to close above that mark. And for the remainder of 1990,
the 3000 mark proved elusive.
The economy was in a recession -- albeit one that wasn't declared until it was
already over -- and worries about Iraqi dictator Saddam Hussein's aggression in
the Persian Gulf ran high. The industrial average fell all the way back to
2365.10 in October. Investors saw eerie reminders of 1966, when the Dow
industrials broke 1000 intraday, only to take six years before they pierced that
level at the closing bell.
Finally, in the spring of 1991, after the U.S. had overwhelmingly vanquished
Saddam Hussein's forces and the recession (still undeclared) was over, the
industrial average rallied and broke the 3000 barrier, closing at 3004.46. The
date was April 17, 1991, a little more than four years after the 2000 barrier
fell. By contrast, it took the average 14 years to get from 1000 to 2000 (a
larger percentage move).
George Bush, who had presided over the Gulf War against Mr. Hussein's forces,
was president when the milestone was reached. But the economic weakness of 1990
and early 1991, among other things, weakened his standing with the electorate
and he lost the 1992 presidential election to Bill Clinton.
Once the 3000 mark was passed, notes Laszlo Birinyi, head of Birinyi Associates
in Greenwich, Conn., the market settled into a remarkably tight trading range,
''almost a knot.'' For eight months, the industrial average spent almost all its
time between 2900 and 3100. It was as if the 3000 level had become a magnet.
Then in late December, stocks took off again, on their way to the next
milestone.
