Dow 50,000: A Milestone That Signals Broadening Market Strength

This week’s insight reveals what Dow 50,000 means for investors and Main Street America.

There was outright turmoil in some corners of the stock market last week. Software companies, private equity firms, and even big-cap tech felt the brunt of targeted selling pressure. Diversified investors fared better than the S&P 500 and Nasdaq—the Dow Jones Industrial Average, the S&P 500 Equal Weight Index, international index funds, and domestic small- and mid-cap ETFs actually notched record highs.

This sort of under-the-surface strength has not been the current bull market’s M.O. From the get-go in October 2022, the Magnificent Seven stocks led the way. The 10 most valuable U.S. companies ascended from 25% of the S&P 500’s total value to 42% by late last year.

Today, the global equity market is being rejiggered. We could go through all the numbers—Microsoft’s post-earnings plunge, Amazon slipping below $200 per share, and Apple stuck in a rut. But that would miss the larger signal. Broader participation matters, and nothing captured it more clearly than the Dow crossing 50,000 for the first time.

Between Super Bowl feature stories and political fodder, evening news and non-finance online publications had no choice but to mention the Dow’s historic (albeit somewhat arbitrary) achievement. It’s a sign that the “real economy” might just be getting on better than pundits suggest. 

To be clear, a “jobless boom” might be the best descriptor, but consider that last week a key manufacturing gauge flipped positive for just the second time since Q3 2021. What’s more, regional bank shares—maybe the ultimate U.S. economic bellwether group—reached record highs too. Even the blue-chip Dow Jones Transportation Average tagged an all-time high. 

The hope is that the current lofty GDP growth rate (call it 4% on an inflation-adjusted basis) will persist, leading to an eventual small-business renaissance and sustained job growth later this year. That expectation isn’t unfounded—equity markets are widely viewed as leading indicators, typically looking ahead about six months.

So, while public sentiment remains broadly sour on current macro conditions, there’s a real chance the mood could shift by summer.

Dow 50,000—Not Everyone is Thrilled...Still a “Hated” Rally

Source: Yahoo Finance